PDD’s Earnings Look Like Bed Bath & Beyond Right Before It Went Belly-Up

If you’ve scrolled through Money Twitter even once this year, you’ve seen it: “Temu is the future.” “PDD is my highest-conviction play.” “My entire portfolio is built around a company that is gonna send Bezos to the poor house.” Congrats. You’ve officially been baptized into the Church of Temu.

But this morning, PDD Holdings (the Chinese company that owns Temu) just reminded everyone why betting your portfolio on cheap junk and free shipping might not be the genius move it sounded like in a 17-tweet thread.

Let’s start with the numbers. PDD just posted first-quarter revenue of $13.3 billion. That missed Wall Street expectations by nearly a full billion and marked its slowest growth since early 2022. But the real surprise came with profit. Net income dropped 47% from the same quarter last year, falling from $3.9 billion to $2.03 billion. If you’re wondering how bad that is, maybe read that again. That’s a drop in net income on par with what Bed Bath & Beyond was reporting before it circled the bankruptcy drain.

Why the sudden fall? Well, Temu’s business model was basically a hack: ship cheap stuff straight from China, dodge import fees using a U.S. trade loophole, and flood the American market with $2 facial steamers and inflatable ottomans. But that loophole (the “de minimis” exemption) just got crushed. Thanks to rising U.S.-China tensions and pressure from the Trump camp, Temu no longer gets to ship every glitter phone case and knockoff sneaker into the States without paying up. So now they’re either paying tariffs or rushing to stock U.S. warehouses. The party’s over, and it’s crushing their margins.

In response, Temu hiked prices in April, which sort of defeats the whole point of Temu. If you’re no longer the “everything’s under five bucks” app, what exactly are you? Just a less trustworthy Amazon clone with suspiciously glowing customer reviews and a 30-day shipping window? On the other hand, I’ve ordered things from Amazon and got it two hours later.

Temu tried to pull the classic move… if things get messy in the U.S., just go global. Surely Japan or Europe would roll out the welcome mat, right? Not exactly. Japan’s already talking about initiating restrictions on tax-free imports, and over in Europe, the EU is pushing for a flat fee on small parcels from China. That’s a major problem for a company whose entire business model depends on flooding foreign markets with dollar-store goods at rock-bottom prices. So instead of looking like the next Amazon, Temu’s world domination strategy is starting to look more like Wish.com with a slightly better marketing team and a nicer app icon.

Back home in China, things aren’t much better. PDD’s original platform, Pinduoduo, is now caught in a price war with Alibaba and JD.com. JD got a shot in the arm from government stimulus and trade-in subsidies. PDD didn’t. So things are not looking exactly how that one guy on money twitter told me.

Look, Temu’s not going anywhere. Americans still love scrolling through the app like it’s an addiction, adding random trinkets to their carts at 2 a.m. But let’s stop pretending this is Amazon. If your entire investment thesis was “Temu is going to dominate e-commerce,” it might be time to rework that spreadsheet.

PDD’s stock is down 19% so far… and honestly, that feels like a light slap on the wrist given how brutal the earnings report was. Maybe Wall Street’s willing to give them a pass because of the tariff situation. Maybe they’re still high off last quarter’s numbers. Either way, that grace period won’t last forever.

PS: It’s a mess out there.

One day the market’s ripping, the next day it’s Black Monday all over again. Recent earning’s reports have been a total coin flip. One stock beats and explodes 30%… the next misses by a penny and gets sent to the Shadow Realm. And through it all, everyone’s begging for Jerome Powell to finally cave and cut rates.

But underneath all the panic headlines (“Inflation too sticky!” “Recession imminent!” “Tariffs round 4 incoming!”) something wild is happening…

We’re seeing violent price action. Especially in the small-cap space, where low floats and high anxiety are creating the perfect recipe for 100%+ pops before lunchtime. Some of these names are moving 200%+ in under 24 hours… and to our knowledge, NO ONE else is covering them.

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Stock.News has positions in Amazon.