In One Day, Temu’s Parent Company (PDD) Lost More Than the GDP of 90 Nations

The parent company of Temu, the fast-growing shopping app that’s been giving Amazon sleepless nights, just faced a major setback that’s probably got Jeff Bezos laughing uncontrollably. 

That’s right, PDD Holdings saw its stock plummet by almost 30%, wiping out over $50 billion in market value in 24 hours. To put that in perspective, they lost more market value in a single day than the entire GDP of more than 90 countries.

So, what went wrong? On the surface, PDD’s second-quarter performance seemed solid—an 86% year-over-year revenue increase, pulling in $13.6 billion. But here’s where the wheels came off: Wall Street was expecting them to hit closer to $14 billion. That $400 million shortfall triggered a massive sell-off.

This 28.57% drop in PDD’s stock wiped out a big chunk of the 73% gain it had accumulated over the past year. It was a harsh reminder that in the tech world, it’s not enough to just grow—you’ve got to blow expectations out of the water. Meanwhile real estate investors would be thrilled to make 10% a year on their real estate property.

The challenges ahead are real. Jun Liu, PDD’s financial chief, pointed to growing competition and external pressures that could make future growth a lot harder to come by. Amazon’s plan to launch a low-cost shopping platform in China is a direct shot at Temu’s market, adding to the pressure from other Chinese giants like Alibaba, JD.com, and Shein. Throw TikTok’s growing “Shop” marketplace into the mix, and it’s clear PDD has its work cut out for it.

PDD’s co-CEO, Lei Chen, didn’t shy away from reality either. He warned that the company might need to make “short-term sacrifices” and accept a potential dip in profitability as they continue to invest in their platform. This includes enhancing the quality of merchants on Temu and Pinduoduo and beefing up trust and safety measures—critical steps for maintaining consumer confidence in the long run.

However, not everyone is ready to write PDD off. Shaun Rein, managing director of the China Market Research Group, believes the market’s reaction might have been a bit too extreme. He pointed out that despite missing revenue expectations, PDD is still growing at a robust 86% year-over-year. From his perspective, the core business remains strong, and this dip might just be a temporary setback rather than a sign of deeper issues. In other words, he thinks you should “buy the f’ing dip!”

It’s crazy, though, isn’t it? You can spend months—even years—building up your company’s stock price, inching it higher bit by bit, only to watch a third of it vanish in a single day after posting an 86% revenue increase. PDD isn’t alone in this kind of market whiplash. Just look at Netflix, which dropped about 35% in a single day in 2022 after slightly missing subscriber growth targets, or Meta, whose shares plunged nearly 25% the same when their ad revenue barely fell short of expectations. Just goes to show what can go up fast, can go down even faster.

Stock.News has positions in Amazon, Meta, and Netflix.