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Temu Owner PDD Posts Revenue Miss, Warns of Slowing Sales

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Bloomberg Aug 26 23:32 · 15.5k Views

PDD Holdings Inc.’s shares fell the most on record after it warned that "a downward trend in profitability is inevitable." The Chinese e-commerce business, which owns Temu, also posted quarterly revenue numbers that missed analysts' estimates. Annabelle Droulers reports on Bloomberg Television.

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Transcript

  • 00:00 US Mr.
  • 00:00 Chairs of
  • 00:01 PDD, this is the owner of the online platform TAMU plunged over 28% in New York after it warned of slowing sales.
  • 00:08 I'll take reporter Anibal Jewellers is here in Sydney
  • 00:10 to talk through.
  • 00:11 And you know, yes, disappointing when it comes to the revenue miss, but was it more about kind of the the warning that we heard in terms of how tough it's going to be going forward?
  • 00:19 Yeah, that's right.
  • 00:20 I mean, when you take a look at sort of the headline figure here, we saw
  • 00:23 revenue coming in at CN¥97 billion and the estimate had been for around CN¥100 billion.
  • 00:29 So
  • 00:30 yes, it's a miss.
  • 00:30 But again, as you say, it was really about that outlook
  • 00:33 because we heard again and again from the Co founder, Chen Lei really stressing that the current trajectory that the company's on is not sustainable.
  • 00:40 And I think
  • 00:40 you can really think about what, what is the current trajectory or what has been the trajectory of PDD.
  • 00:45 And it has been the really that big run up in share price.
  • 00:47 We actually even saw last year PDD overtaking Alibaba in market cap,
  • 00:52 managing to to to really attract a lot of value, particularly through TAMU that's its offshore ecommerce arm that was even starting to test the likes of Ali, Amazon, rather Walmart.
  • 01:03 But this has certainly come at a cost and it really seems to have come to come at a cost on margins.
  • 01:08 There are concerns, as we said from the founder, there are Co founders saying that competition not only expected to stay, it's expected to intensify here.
  • 01:16 And that is really one of the key risks
  • 01:18 and the aggressive international expansion could run into regulatory headwinds.
  • 01:22 Exactly.
  • 01:22 That's that's another really big problem facing TAMU and and and of course PD PDD as a whole here.
  • 01:28 But what we understand, at least in the the EU, for instance, is that they're working on a proposal possibly to close a
  • 01:34 loophole essentially so it would be more difficult to buy cheap goods online and bring them into the block.
  • 01:40 So that's one thing that could be
  • 01:43 introduced and, and primarily targeting perhaps is what Bloomberg News has been reporting, but primarily targeting retailers from China like Taimu.
  • 01:51 We've also seen, of course,
  • 01:53 US giants that are really paying attention to PPPDD strategy, which is essentially connecting factories
  • 02:00 to sellers, directly removing the middle men.
  • 02:02 That's how they're also offering those cheaper costs.
  • 02:04 And you've got Amazon, for instance, looking to introduce a similar service.
  • 02:07 And we saw PDDA little bit under pressure when that was announced a couple of months ago.
  • 02:11 So again, not only you're facing more regulatory scrutiny, you're also facing retailers that are catching up to that distinctive model.
  • 02:21 What does that mean for the future of PDD?
  • 02:24 Could we see more global expansion given all of that bright side that you talk about?
  • 02:30 Actually, there's an interesting report out from Bloomberg Intelligence and they're a little bit more optimistic on the outlook.
  • 02:35 Yes, they're saying that this latest set of earnings certainly will be
  • 02:40 difficult or
  • 02:42 a set of challenges facing the company over the shorter term.
  • 02:44 Longer term though, they're actually still optimistic on PDD's opportunities or it's outlook here.
  • 02:50 They're saying that sales could jump more than 20% annually through 2027 if they continue to add e-commerce market share via the team of app outside of mainland and China.
  • 02:59 So even though they're looking to to see some margin gains, they still could attract more customers, more merchants,
  • 03:06 also expand their global ecosystem.
  • 03:08 So these are all some of the positives that looking at, as I said, they are
  • 03:12 seeing that revenue jump of more than 20% for the next few years.