P R E M I U M

E-COMMERCE | Wednesday, March 20

Temu Takes Over




Temu’s Owner—The PDD Group—just smashed earnings expectations as spending surged on the discount marketplace


BREAKING NEWS

PDD Holdings—owner of the discount e-commerce player Temu—just added $30 billion to their market cap overnight thanks to a brilliant earnings beat. Is China making a real comeback? 

WHAT HAPPENED

Temu has been making a bunch of big splashes in an attempt to expand their footprint in the U.S. and it appears to be paying off. PDD Holdings managed to generate a brilliant $2.41 EPS from  $12.4 billion in revenue. This demolished the Street’s expectations and has investors piling into the stock. 

PDD managed to significantly improve margins on their sales while still increasing their overall costs. They pulled this off via surging revenues in their advertising and services revenue. But there are bigger factors here that have investors far more excited. 

ROAD TO RECOVERY

PDD management chalks this beat up to improving customer sentiment in China. While Temu revenues are experiencing an upswing—consumers in China are finally starting to spend more as well. Investors were concerned that PDD was getting cannibalized by discount operations at JD and their main rival Alibaba. This result helps demonstrate that broader retail spending is recovering in China. More importantly, it shows how PDD is still the discount king in this market. 


WHY IT MATTERS

As consumer spending remains strong worldwide, we’re seeing a big shift in how folks are spending. More buyers are opting to buy discounted goods instead of just not spending at all. PDD is a huge winner in this trend as they’ve mastered the infrastructure necessary to deliver cheap goods super efficiently. PDD’s massive margin wins are also set to increase in 2024—further boosting investor sentiment. PDD stock popped over 17% In early trading as a result of this huge beat. 

 


 



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