PDD’s Shares Climb After Earnings Beat Soothes Worst Trade Fears

(Bloomberg) — PDD Holdings Inc. shares climbed after the owner of Temu reported a faster-than-expected 18% earnings rise, assuaging investors’ concerns about a business vulnerable to US tariffs and intensifying domestic competition.

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The stock gained 4% in New York even though the e-commerce company reported lower-than-anticipated revenue of 110.6 billion yuan ($15.3 billion) for the December quarter. Net income climbed to a stronger-than-expected 27.4 billion yuan.

PDD’s results come at a time of heightened uncertainty about its business both domestically and abroad, which has helped tamp down expectations. Temu is grappling with elevated US tariffs on Chinese products and the potential closure of a tax loophole for small-value parcels. Domestically, PDD has warned about competition since August and predicted that its profitability will trend downward over time.

The “earnings beat should help restore market confidence in its 2025 earnings outlook,” Morgan Stanley analysts wrote, adding that the stock was trading at just 11-times projected 2025 earnings. “Because of the tariff overhang on Temu and competition in EC, market expectations for the year are not high.”

Still, executives on Thursday acknowledged challenges from growing global uncertainty and said intense competition also affected short-term growth. They reiterated their support for merchants and efforts to boost the consumer experience.

“As mentioned in previous quarters, our significant ecosystem investment coupled with fast-changing external environment and intensified competition landscape will impact short-term financials,” Chairman and Co-Chief Executive Officer Chen Lei told analysts on a call.

In contrast, rivals JD.com Inc. and Alibaba Group Holding Ltd. reported better-than-projected sales for the December quarter, when Beijing ramped up policies such as subsidies and trade-in incentives to boost spending. The government has prioritized expanding domestic demand as the country seeks to offset the impact of US President Donald Trump’s tariffs and achieve a growth target of around 5%.

Thursday’s report “lacks any major bright spot,” JP Morgan analysts Andre Chang and Alex Yao wrote in a note, which cited misses on both transaction service revenue and online marketing service revenue.