PDD’s stock sinks 25% after profit warning despite record revenue in June quarter
- The company saw its revenue reach a record 97 billion yuan (US$13.6 billion) for the three months to June, up 86 per cent year on year
PDD Holdings’ stock plunged 25 per cent on Monday after it warned of uncertainty ahead and downward pressure on profits amid increasing competition, despite reporting record revenue for the second quarter.
The parent company of domestic online e-commerce platform Pinduoduo and cross-border retailer platform Temu saw its revenue reach a record 97 billion yuan (US$13.6 billion) in the June quarter, up 86 per cent year on year, but lower than the consensus analysts’ forecast of 99.9 billion yuan compiled by Bloomberg.
Net profit soared 144 per cent to 32 billion yuan, beating the forecast of 27.5 billion yuan.
PDD’s Nasdaq-listed stock slumped 24.93 per cent to US$105.68 at the open on Monday morning US time.
PDD chairman and co-CEO Chen Lei said on the earnings call that the company has no plans to buy back shares or make dividend payments to shareholders in coming years as it has to save the cash for investments, dampening investor appetite for the stock.
The company attributed the June quarter growth to improved conditions in the domestic market but warned investors that increasing competition and risks in the “external environment” would affect its revenue growth and profitability over the next few quarters.
