Temu owner’s shares drop as profits cut in half by – Business News
Shares in Temu’s Chinese proprietor PDD Holdings plunged 13.9% on Tuesday after the e-commerce giant reported its slowest income growth in three years and a sharp drop in revenue.
The dismal quarterly outcomes come as Temu’s business model 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.
During a post-earnings call with analysts, Temu proprietor PDD Holdings’ Chair and CEO Chen Lei blamed a “radical change in external policy environments such as tariffs.”
The company made “substantial investments” to assist retailers and customers during 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 mentioned.
Temu reported sluggish income growth and plunging revenue after President Trump ended a tax loophole used by Chinese fast-fashion corporations. REUTERS
PDD Holdings reported income rose 10% in the primary quarter to 95.67 billion yuan, or roughly $13.31 billion. That marked its slowest growth for the reason that begin of 2022.
Net revenue practically halved during the identical period, 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 raising costs, there was a notable decline in Temu’s US gross sales, Citi analysts mentioned in a observe earlier this month.
Imports value much less than $800 confronted a 120% tariff when Trump lifted the de minimis exemption. The White House has since lowered this price to 54%.
An worker packages clothes for Temu at a clothes manufacturing facility in Guangzhou. AFP through Getty Images
The majority of these packages can skip this payment, nevertheless, and pay the US’ decrease 30% tariff on China as a result of they’re shipped by business carriers, in response to a Reuters report.
It’s nonetheless a huge hit to Temu, which relied closely on its ultra-low costs and speedy transport to win over US clients.
Citi has slashed its annual income forecasts for the retailer by 0.6% in 2025 and a pair of.3% in 2026.
Meanwhile, PDD is going through challenges with its Pinduoduo platform in China amid a slowdown in client spending and a real estate market droop, as properly as sturdy 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 vice president of finance, mentioned.
