PDD Holdings Inc (NASDAQ:PDD), the owner of controversial eCommerce platform Temu, saw its values sump by more than £41 billion after sales missed targets with China in particular hit by growing competition.
Shares in the group crashed 29%.
Co-founder Chen Lei said: “Competition is here to stay and is expected to intensify in our industry. High revenue growth is not sustainable, and a downward trend in profitability is inevitable.”
The shopping platform reported revenue of 97.1 billion yuan (£10.3bn) for the three months ending June, lower than the 100 billion yuan expected by analysts.
Russ Mould, investment director at AJ Bell, added: “PDD was meant to have been the untouchable e-commerce retailer, cleaning up its local market via the Pinduoduo brand and using its Temu platform as the international growth vehicle for the business.
“The group’s stellar run has come to a crashing halt. There is a perfect storm of uncertain economic conditions, cautious consumers and competitive pressures. It suggests that even bargain basement operators can struggle if consumers are thinking hard about where they spend money.
“Temu might have cracked the formula for engaging and persuasive advertising on social media, but there is a point where consumers feel overwhelmed by the constant sales pitches.
“The sharp fall in PDD’s share price will prompt the market to reappraise the business. The latest results are a reminder that even the most successful companies cannot maintain very high levels of growth forever.”