Shares of PDD Holdings Inc DRC (NASDAQ:PDD), the parent company of fast-growing e-commerce platform Temu, plunged more than 18% following a weaker-than-expected financial performance for the first quarter of fiscal 2025.
The Chinese online retail giant reported earnings per share of RMB11.41, falling significantly below the RMB19.44 consensus estimate. Revenue for the quarter climbed 10% year-over-year to RMB95.67 billion, but that, too, fell short of analysts’ expectations, which were pegged at RMB102.98 billion.
Commenting on the results, Chairman and Co-CEO Mr. Lei Chen explained the company’s strategic focus during the quarter.
“In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment,” he said.
“These investments 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 added.
In terms of segment performance, revenue from online marketing services and other streams slightly exceeded expectations, totaling RMB48.72 billion versus the forecast of RMB47.99 billion. However, transaction services fell short, generating RMB46.95 billion compared to the projected RMB54.23 billion.
Morgan Stanley analysts weighed in on the earnings, describing the report as a “slight beat” on online marketing services but noting a “big miss” on overall profitability.
The disappointing financials, particularly the steep EPS shortfall and underperformance in core transaction revenue, weighed heavily on investor sentiment, driving a sharp sell-off in PDD shares. As the company continues to balance aggressive investment with profitability, market watchers will be looking for signs of stabilization in future quarters.