China’s PDD Holdings fell short of market estimates for third-quarter revenue and profit on Thursday, as promotional offers and discounts did not persuade cost-conscious consumers to spend as much as expected on its e-commerce platforms.
PDD‘s U.S.-listed shares were down 8% in pre-market trading.
Higher unemployment among Chinese youth and a property sector crisis have taken a toll on consumer confidence, holding back sales at Pinduoduo, PDD‘s domestic online shopping site.
Its domestic competitors, e-commerce majors Alibaba and JD.com, also reported tepid sales growth for their respective September quarters.
While Pinduoduo has benefited from its low-cost focus, competitive pressure has been increasing with rivals ramping up their own promotions and discounts, resulting in a price war.
“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Jun Liu, VP of Finance at PDD Holdings.
PDD‘s revenue jumped 44% to 99.35 billion yuan ($13.72 billion) for the three months ended Sept. 30. That compared with the 102.65 billion yuan average of 17 analyst estimates compiled by LSEG.
Net income rose to 24.98 billion yuan from 15.54 billion yuan in the same period a year earlier, but the firm reported an adjusted profit of 18.59 yuan per American Depository Share, missing estimates of 19.79 yuan.
In August, following the announcement of a second-quarter earnings miss and downbeat commentary from executives about the firm’s outlook, PDD shares saw their biggest one-day fall since its 2018 listing, wiping out nearly $55 billion in market capitalisation.
Reuters
