Shares in Temu’s Chinese language proprietor PDD Holdings plunged 13.9% on Tuesday after the e-commerce large reported its slowest income development in three years and a pointy drop in revenue.
The dismal quarterly outcomes come as Temu’s enterprise mannequin has been hammered by President Trump’s tariffs, together with his finish to the de minimis exemption, which allowed abroad fast-fashion corporations to ship low-value packages into the US duty-free.
Throughout a post-earnings name with analysts, Temu proprietor PDD Holdings’ Chair and CEO Chen Lei blamed a “radical change in external policy environments such as tariffs.”
The corporate made “substantial investments” to help retailers and shoppers throughout this time, which “weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform,” Chen stated.
PDD Holdings reported income rose 10% within the first quarter to 95.67 billion yuan, or roughly $13.31 billion. That marked its slowest development because the begin of 2022.
Web revenue practically halved throughout the identical interval, plummeting 47% to roughly $2 billion.
Analysts polled by FactSet had anticipated income of $14.49 billion and revenue of $3.63 billion.
After Trump killed the commerce loophole in April, Temu hiked costs throughout its web site and pushed “local warehouses,” or US-based sellers with stockpiles of imported items.
Since elevating costs, there was a notable decline in Temu’s US gross sales, Citi analysts stated in a observe earlier this month.
Imports price lower than $800 confronted a 120% tariff when Trump lifted the de minimis exemption. The White Home has since lowered this charge to 54%.
Nearly all of these packages can skip this price, nevertheless, and pay the US’ decrease 30% tariff on China as a result of they’re shipped by way of industrial carriers, based on a Reuters report.
It’s nonetheless a large hit to Temu, which relied closely on its ultra-low costs and speedy delivery to win over US prospects.
Citi has slashed its annual income forecasts for the retailer by 0.6% in 2025 and a couple of.3% in 2026.
In the meantime, PDD is dealing with challenges with its Pinduoduo platform in China amid a slowdown in client spending and an actual property market droop, in addition to robust competitors from friends Alibaba Group and JD.com.
“Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times,” Liu Jun, PDD’s vp of finance, stated.
