Temu Parent Company PDD Holdings Posts 2Q Miss, Analysts Say Long-Term Investments Hurt Short-Term Profitability

Core Viewpoint - PDD Holdings Inc reported disappointing fourth-quarter revenues, leading to a decline in share price amid a busy earnings season [1] Revenue Performance - PDD reported quarterly revenues of RMB 111 billion ($15.3 billion), representing a 24$827 million) [2] - Online marketing services revenue grew by 17% year-on-year, aligning with expectations [2] Transaction Revenue Insights - Transaction revenues increased by 33% year-on-year, primarily driven by international expansion and Temu, but also missed consensus by RMB 6 billion [3] - The shift in Temu's business model from a full-entrusted model to a semi-entrusted model has led to a significant shortfall in transaction commission revenue [4] Investor Sentiment - Investors are concerned about the company's investments aimed at building a healthy ecosystem, which negatively impacts short-term profitability [5] - PDD is focusing on developing its platform ecosystem and adapting to domestic competition [5] Analyst Ratings - Benchmark analyst Fawne Jiang reiterated a Buy rating with a price target of $160 [6] - Goldman Sachs analyst Ronald Keung maintained a Buy rating with a price target of$157 [6]