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Temu’s parent company, PDD Holding, saw shares fall about 17% on Tuesday morning after reporting a major first-quarter earnings miss.
The Chinese e-commerce giant reported that its first-quarter net profit plummeted 47% as it grapples with a trade war and domestic competition.
Mscience analyst Vinci Zhang told Reuters the “massive bottom line miss is due to much weaker than expected operating margin, likely impacted by U.S. tariffs.”
PDD Holdings (PDD+0.91%) did report a 10% year-over-year increase in total revenues for the first quarter of 2025, reaching RMB95.67 billion (US$13.18 billion), primarily from gains in online marketing and transaction services. But the company’s operating profit dropped 38% to RMB16.09 billion (US$2.22 billion). Non-GAAP operating profit also declined 36% year-over-year to RMB18.26 billion (US$2.52 billion).
U.S. Tiger Securities analyst Bo Pei told Reuters that “slower domestic consumption, intensified competition, and global trade frictions are weighing on growth.”
Temu was set to be one of the companies most affect by Trump’s trade war with China since its products were subject to hefty tariffs. The planned closure of the de minimis loophole will no longer allow shipments under $800 to come into the country without facing levies. While many of those tariffs have been deescalated or paused, PDD is still feeling the hurt.
“A slowdown in growth rate is expected as our business scales and challenges emerge. This trend has been further accelerated by the changes in the external environment in the first quarter,” Jun Liu, VP of Finance of PDD Holdings, said in a press release. “Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times.”