FinTwit’s Losing Its Pants Over PDD’s “Miracle” Earnings… But It’s Mostly Smoke and Subsidies

PDD Holdings (the parent of Temu) just pulled off the legendary “Call an ambulance… but not for me” routine on Wall Street.

Heading into earnings, everyone thought this quarter was gonna be a full-blown murder scene. Trump’s tariff barrage was already kneecapping imports, the death of the de minimis loophole (that sneaky tax cheat code Temu and Shein abused to ship $5 air fryers into the U.S. duty-free) was supposed to nuke their U.S. biz, and Chinese consumers are clutching their wallets like it’s 2008 and Lehman Brothers just belly-flopped. On paper, this should’ve been uglier than Jared Leto’s Joker… the kind of earnings call where analysts mute their mics just to roast the numbers in Slack.

But instead, PDD pulled the financial equivalent of the Undertaker sitting up in the coffin meme and shocked everyone with a beat. Revenue hit $14.5 billion, up 7% year-over-year. Sure, that’s a far cry from the double-digit rocket ride they were on a couple years ago, but compared to the funeral analysts were expecting… it looked downright heroic.

The biggest shock came from their adjusted earnings… which came in at $3.08 per ADS. For reference, the Street had penciled in $2.08. (Quick refresher: ADS stands for American Depositary Share… basically Wall Street’s way of letting you buy Chinese stocks without opening a brokerage account in Shanghai.) And while net income did slip 4% to $4.5 billion, that was still better than the market had feared. Once the numbers hit, traders didn’t bother parsing the details. They immediately read the first line of the press release and sent the stock up over 11%.

But let’s tap the brakes… this wasn’t some “we’re e-commerce geniuses” win. China’s economy is hobbling on crutches and blind hope. Consumers aren’t spending, the housing market looks like it’s one push from imploding, and Trump’s tariff gun pretty much has unlimited ammo. So Beijing did what Beijing does: smashed the stimmy button and sprayed subsidies on phones and appliances. So don’t let anyone on Twitter tell you this was an amazing performance… PDD just happened to be in the right place with the right bucket.

(Source: Bloomberg)

Meanwhile, Temu, which was supposed to be PDD’s secret weapon… is not looking too hot. Once the U.S. closed that loophole in May, Temu’s American user base cratered. Monthly active users dropped by as much as 46% in just one quarter, according to Bloomberg Intelligence (read that again.) To make matters worse, Temu has dialed back ad spending, so those “shop like a billionaire” TikTok ads may finally disappear. Silver lining for your feed, sure, but not great for growth.

This all comes down to one word: sustainability. And even PDD’s own execs are all but screaming “don’t get comfy.” Finance bro Jun Liu admitted JD.com and Alibaba are beating the sh*t out of them every day, while Co-CEO Zhao Jiazhen flat-out said these profit levels are “not sustainable” (translation: enjoy it now, because we’re cooked later). The receipts prove it… operating profit cratered 21% to $6.8B as costs went absolutely nuts.

So yeah, all the PDD stans on FinTwit are losing their minds over the earnings beat, spamming rocket emojis like they’ve found an indestructible stock to invest in. But once you scrape off the hype, what you really see is more caffeine buzz from Beijing’s subsidies than actual muscle. Strip away the government training wheels and the tax loophole hacks, and you’re staring at a company in a bar fight with Shein, JD, Alibaba, and Amazon…  and spoiler: those aren’t the guys you want to square up against without backup. Today’s pop might feel like a victory but as we all know… government stimulus money doesn’t last forever.

At the time of publishing this article, Stocks.News holds positions in Amazon as mentioned in the article.