PDD Holdings, the Chinese owner of online shopping platforms Temu and Pinduoduo, has reported disappointing sales and profit as Chinese consumers continued to hold back amid an economic slowdown.
US-listed shares of the e-commerce giant fell nearly 11% on Thursday following the announcement.
It comes after PDD’s main rivals in its home market, Alibaba and JD.com, also posted underwhelming results in the September quarter.
Consumer confidence in China has taken a hit from a crisis in the country’s property sector and high levels of youth unemployment.
In the quarter that ended in September, PDD’s revenue reached 99.35bn yuan ($13.7bn, £10.9bn), below analyst forecasts of around 102.8bn yuan.
It is the second quarter in a row that PDD misses analyst estimates, after years of fast growth.
“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Jun Liu, VP of Finance of PDD Holdings.
While PDD’s Chinese e-commerce platform, Pinduoduo, has become popular because of its focus on low-cost and heavily discounted products, a growing number of rivals have been adopting similar strategies, triggering a price war.
“China’s retail sector is grappling with headwinds from the broader economic slowdown, with consumer confidence yet to fully recover, ” said James Yang, a partner in retail and consumer products at management consulting firm, Bain & Company.
“Looking ahead, e-commerce growth is expected to continue… albeit at a slower pace.”
Meanwhile, PPD’s thriving global e-commerce platform, Temu, is also facing problems overseas.
“There’s uncertainty on potential tariff change and increasing pushback from more countries related to its ‘cheap’ prices,” said Alicia Yap, an equity research analyst at Citi, before the results were announced.
Last week, Vietnamese authorities said Temu and Shein needed to register with the government before the end of the month or face a ban.
In October, Indonesia ordered Google and Apple to remove Temu from their app stores in a bid to protect the country’s own retailers.
The EU has also launched an investigation into whether the Chinese e-commerce platform facilitated the sale of illegal products that could lead to steep fines.
And, in the US, President-elect Donald Trump has vowed to raise tariffs on imports of Chinese goods, potentially removing Temu’s competitive advantage by driving up prices of its super-cheap products.