Low-cost e-commerce giant PDD Holdings (PDD.O) beat Wall Street estimates for fourth-quarter revenue on Wednesday, driven by the robust growth of its global platform Temu and end-of-year sales festivals in China, including Singles Day.
U.S.-listed shares of the company, which is also parent to Chinese online discount retailer Pinduoduo, rose more than 9% in early trading.
PDD's revenue for the three months ended Dec. 31 was 88.88 billion yuan ($12.35 billion), topping the 79.23 billion expected by analysts, LSEG data showed.
The quarter's year-on-year revenue growth of 123% follows a 94% third-quarter rise. Both comparable quarters in 2022 were impacted by COVID restrictions in China, which were only dropped in December of that year.
Temu, which launched in September 2022, is now operating in 51 global markets. Its expansion has been costly however, with PDD's sales and marketing expenses growing 50% on the year to 26.64 billion yuan.
PDD has gained market share with highly competitive pricing in China and overseas as customers favour affordable or discounted products in uncertain economic times.
Temu, which sells $4 home decor items and $10 T-shirts in the United States and major European, Middle Eastern and Asian markets, has been attracting customers from rivals such as Dollar Tree (DLTR.O) and other brick-and-mortar retailers.
Brokerage Bernstein said in January that political discourse in the U.S. could be the biggest risk to Temu's continued success there as tensions with China rise.
On an earnings call with analysts, PDD chairman and co-CEO Chen Lei acknowledged that the global business remains in its early stages. "There are many uncertainties and challenges ahead," he said.
“Investors will want to see how (PDD) navigates scrutiny and how it romances other markets on the off chance the U.S. pulls the plug in the same way politicians are seeking to do with TikTok," said Danni Hewson, head of financial analysis at AJ Bell, who added that supply chain scrutiny is also likely to be a future challenge.
Speaking about China, executive director and co-CEO Zhao Jiazhen said Pinduoduo was looking forward to further improvement in consumer sentiment, helped by the government's macro policies.
PDD overtook Alibaba Group Holdings (9988.HK), on Dec. 1 to become the most valuable Chinese e-commerce company by market capitalisation after Morgan Stanley downgraded Alibaba.
($1 = 7.1987 Chinese yuan renminbi)
