Chinese e-commerce giant Pinduoduo has lagged behind rivals Alibaba and JD.com when it comes to international expansion. Now Pinduoduo has launched an e-commerce website called Temu in the United States.
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Analysts say Pinduoduo’s value-for-money positioning and the growth of Temu Market have helped the tech giant take the lead in China’s e-commerce sector, making it the country’s most valuable company in the sector.
Pinduoduo Holdings Shares soared 7.5% after reporting stellar first-quarter results on Wednesday, giving it a market value greater than rivals Alibaba Group. According to LSEG data, Pinduoduo’s share price has more than doubled in the past year, rising 109%.
Pinduoduo, which also owns Chinese discount shopping app Pinduoduo, is worth about $208 billion, according to the London Stock Exchange, compared with Alibaba’s $196 billion. JD.com ranks third with a market capitalization of US$48 billion.
“We believe Temu’s profitability will improve faster than previously expected due to the introduction of a semi-consignment model where logistics costs will be borne by merchants,” Morningstar said in a report. Attention Thursday.
“We also believe Pinduoduo’s domestic platform will be able to defend its position given strong consumer perceptions of its value-for-money positioning,” Morningstar analyst Chelsey Tam said, adding that Pinduoduo ranks among their preferences. ranked first, while JD.com and Alibaba were second and third.
Goldman Sachs on Friday upgraded Pinduoduo to “buy” from “neutral,” citing the company’s continued momentum in first-quarter ad revenue and Temu’s potential.
Goldman Sachs analyst Ronald Keung said in the report that the upgrade is “with its ad technology capabilities, combined with cost-competitive suppliers/merchants/supply chains in China, and favorable risk-reward, the current market capitalization means Temu has no valuation value”. notes.
Keung said the market has “now fully priced in” the two key issues of domestic competition and U.S.-China tensions, which is why we downgraded Pinduoduo earlier in March.
Fierce competition
According to data from the London Stock Exchange, Pinduoduo’s market value also surpassed Alibaba in the fourth quarter of last year, but its top spot was taken away by Alibaba in the first quarter.
PDD reported on Wednesday that, Net profit attributable to ordinary shareholders In the March quarter, it increased 246% year-on-year to US$3.87 billion (27.99 billion yuan), significantly exceeding LSEG’s forecast of 12.86 billion yuan.
Transaction services revenue, also known as merchant fees, Revenue was US$6.14 billion, an annual increase of 327%.
“We actively responded to consumption promotion policies and launched a series of promotional activities to meet users’ shopping needs during the Spring Festival and other seasonal events,” Pinduoduo said in an earnings call.
“We are confident in China’s consumer market,” Pinduoduo said.
At the same time, Alibaba’s third-quarter net profit attributable to ordinary shareholders plunged 86% year-on-year to 3.3 billion yuan. Alibaba owns e-commerce platforms such as AliExpress, Alibaba International Station, Taobao, and Tmall.
PDD made its first major foray into overseas markets in September 2022 with the launch of Temu, which surged in popularity shortly after a Super Bowl ad aired in 2023 inviting customers to shop “like a billionaire.”
Americans hungry for a bargain are flocking to Tem because Temu expects to continue its rapid growth in the United States and is actively expanding into Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain and the United Kingdom
Bank of America said in a report earlier this month that Temu, TikTok and AliExpress were “leveraging the experience of their parent and sister companies,” adding that it believed Temu was “in a relatively better position” among the companies. Location”.
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