Temu-owner PDD Holdings beats profit expectations, outlook uncertain

Core Insights - PDD Holdings reported a 14% increase in third-quarter adjusted earnings, driven by steep discounts and heavy marketing spending, indicating strong demand in its home market [1] - Adjusted earnings per share reached 21.08 yuan ($2.97), surpassing analysts' expectations of 16.84 yuan, although U.S.-listed shares fell approximately 5% in early trading [1] - Revenue for the quarter rose by 9%, reflecting a moderation in growth compared to previous years [3] Company Performance - PDD's revenue for the quarter ending September 30 was 108.28 billion yuan, slightly below the average analyst estimate of 108.41 billion yuan [5] - Adjusted net income attributable to shareholders increased to 31.38 billion yuan from 27.46 billion yuan a year earlier [6] - The Singles' Day sales festival concluded on a subdued note, with many retailers initiating discounts earlier in October, marking the longest festival to date [6] Industry Context - Major Chinese retailers, including PDD, Alibaba, and JD.com, have been attracting domestic consumers through price cuts and substantial subsidized promotions amid low consumer confidence and a weak property market [2] - The competitive landscape is intensifying as industry peers invest heavily in new business models, leading to increased competition [3] - Global platforms like Temu are facing challenges due to changing trade regulations, including the U.S. ending duty-free exemptions on parcels under $800 and the EU planning to impose duties on low-cost packages [4][5]