Temu owner's shares drop as profits are cut in half by Trump tariffs — CEO blames ‘radical change'

Core Viewpoint - PDD Holdings, the parent company of Temu, experienced a significant decline in stock value following the announcement of its slowest revenue growth in three years and a sharp drop in profit, attributed to changes in tariff policies impacting its business model [1][4]. Financial Performance - PDD Holdings reported a revenue increase of 10% in the first quarter, reaching 95.67 billion yuan (approximately $13.31 billion), marking the slowest growth since early 2022 [4]. - Net profit nearly halved, plummeting 47$2 billion during the same period, falling short of analysts' expectations of $3.63 billion [4]. Impact of Tariff Changes - The company's challenges were exacerbated by President Trump's termination of the de minimis exemption, which previously allowed low-value packages to enter the US duty-free, leading to increased prices on Temu's platform and a subsequent decline in US sales [5][6]. - Following the tariff changes, imports valued under$800 faced a 120% tariff, which was later reduced to 54% by the White House, significantly impacting Temu's pricing strategy [5][6]. Strategic Adjustments - PDD Holdings has made substantial investments to support merchants and consumers, which has affected short-term profitability but aims to foster long-term growth and sustainability [2][7]. - The company is also facing challenges with its Pinduoduo platform in China due to a slowdown in consumer spending and increased competition from Alibaba and JD.com [7].