Temu and Pinduoduo operator PDD Holdings beat analyst forecasts for Q2 revenue, reporting 103.98 billion yuan (around US$14.5 billion), up 7% year-on-year.

The China-based ecommerce company operates Pinduoduo locally and Temu internationally.

Adjusted net income for the quarter dropped to 32.71 billion yuan (around US$4.6 billion) from 34.43 billion yuan (around US$4.8 billion) a year earlier.

US-listed shares of PDD rose nearly 12% in premarket trading after the results.

Chinese ecommerce firms – including PDD, JD.com, and Alibaba – have offered steep discounts to attract customers, leading to a price war.

Temu is expected to have stabilized in the quarter, supported by an extended US-China tariff truce.

The Chinese government has pushed to boost domestic spending amid economic challenges, such as a weak property sector and US-China trade policies.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Price wars squeeze profitability even for market leaders

PDD’s latest results reveal how China’s e-commerce price competition is pressuring even successful companies’ bottom lines.

While the company beat revenue estimates with 7% growth to 103.98 billion yuan, its adjusted net income actually declined from 34.43 billion yuan to 32.71 billion yuan year-over-year1.

This margin compression reflects the broader industry reality where companies are sacrificing profitability to maintain market position through aggressive subsidies and discounts.

The contrast is evident when compared to competitors. JD.com and Meituan shares have fallen 22% and 10% respectively due to the price war’s impact on their earnings2.

JD.com announced a 10 billion yuan subsidy program to support food delivery discounts, demonstrating how companies are allocating significant resources into customer acquisition despite the profit impact2.

2️⃣ Government stimulus programs create temporary consumption boosts but underlying confidence remains weak

PDD’s revenue beat comes against a backdrop of government efforts to stimulate domestic demand through spending programs.

China’s retail sales grew 6.4% year-over-year in May 2025—the fastest pace since December 2023—driven largely by a consumer goods trade-in program that saw household appliances sales surge 53%3.

The government introduced a 200 billion RMB consumer stimulus program, later expanded by an additional 300 billion RMB, highlighting the scale of intervention needed to maintain consumption growth4.

However, these gains appear fragile as declining consumer confidence and rising household savings indicate Chinese consumers remain cautious about spending despite policy support4.

The economy’s 5.3% GDP growth in the first half of 2025 was driven primarily by strong exports rather than domestic demand, suggesting the consumption challenges persist despite temporary policy-driven improvements4.

Recent PDD Holdings developments

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