By Steve Gelsi
PDD is spending more to boost revenue, and its stock is rising as investors seem satisfied with the trade off
Shares of PDD, the parent company of Temu, are up after a revenue beat.
PDD Holdings Inc. beat revenue estimates in the second quarter, but Temu’s parent company has had to spend to ward off competition from rival online retail giants Alibaba Group Holding Ltd. and JD.com Inc.
The upbeat revenue performance suggests that efforts by online sellers to stimulate economic activity in China may be starting to gain traction, although PDD’s (PDD) increased promotional spending in the latest period helped drive a profit miss.
Investors seemed to be nearly neutral on the trade off, as PDD’s stock dipped fractionally in afternoon trading.
PDD chairman Lei Chen said on the earnings call that “competition intensified” during the quarter, but the company remains “committed to long-term value creation over short-term results” by investing in its merchant network.
“As we ramp our investments, profitability will inevitably fluctuate and this quarter’s results may not represent future earnings trends,” he said.
While management didn’t mention tariffs specifically, Chen said the “external environment continued to evolve” during the quarter.
PDD’s second-quarter net income dropped 4% to $4.29 billion, while its adjusted operating income fell by 21% to $3.87 billion.
The company’s second-quarter adjusted income of 77 cents a share fell well short of the FactSet consensus estimate of $2.16 a share.
Second-quarter revenue jumped 7% to $14.48 billion, ahead of the consensus view of $14.31 billion.
The cost of revenue grew 36% to about $6.4 billion as the company invested in merchant-support efforts. PDD incurred increased fees for fulfillment, payment processing and bandwidth and servers.
Including Monday’s moves, PPD’s stock has risen 30.9% so far this year, while the Nasdaq Composite Index COMP has increased by 11.5%. Alibaba’s stock (BABA) has risen by 46..8% in 2025, while JD.com’s stock (JD) is down by 7.6%.
Steve Goldstein contributed
-Steve Gelsi
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08-25-25 1439ET
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