China’s PDD Holdings (PDD) missed market estimates for quarterly revenue on Monday as weak consumer spending dented business on its domestic e-commerce platform Pinduoduo, sending the company’s shares down more than 9% in premarket trading.
Chinese consumers have kept a tight rein on their spending, spooked by a fragile economy, persistent weakness in the real estate sector and high unemployment rates, which have hit the country’s retail and e-commerce sectors.
While Pinduoduo’s low prices and steep discounts on everything from groceries to headphones have attracted budget-conscious shoppers, the company is under pressure from major rivals expanding shopping offers on their own platforms.
“Looking ahead, sales growth will inevitably come under pressure due to increased competition and external challenges… Profitability is also likely to be affected as we continue to invest decisively,” said Jun Liu, vice president of finance at PDD.
Chinese e-commerce giant Alibaba (BABA) missed market estimates for revenue earlier this month, hurt by weakness in domestic e-commerce sales, while JD.com’s quarterly revenue grew just 1.2%.
PDD reported revenue of 97.06 billion yuan ($13.64 billion) in the second quarter, compared with the average analyst estimate of 100 billion yuan, according to LSEG data.
($1 = 7.1173 Chinese Yuan Renminbi)
(Reporting by Deborah Sophia in Bengaluru and Sophie Yu in Beijing; Editing by Pooja Desai and Himani Sarkar)