China's PDD suffers $55 bln market cap wipeout after flagging an uncertain market
Corrects market cap loss number to $55 billion, from $40 billion, in headline and second paragraph
PDD has biggest one-day share price tumble since 2018
Management says stiff competition will hurt revenue growth
Increased investments will weigh on profitability
By Sophie Yu and Deborah Mary Sophia
Aug 27 (Reuters) -China's PDD Holdings PDD.O missed market estimates for quarterly revenue on Monday, and downbeat comments from executives about China's domestic e-commerce competition and the firm's global outlook sent its shares down more than 28%.
The biggest one-day share fall for PDD since it listed in the U.S. in 2018 wiped out nearly $55 billion in market capitalisation. The e-commerce retailer operates discount-focused platforms Pinduoduo in China and Temu for the international market.
"(We) are seeing many new challenges ahead, from changing consumer demand, intensifying competition and uncertainties in the global environment," Co-Chief Executive Chen Lei said on an earnings call with analysts after the results.
"We will enter a new phase of high-quality development that calls for increased investments and our profitability will be affected as a result," he added.
China's fragile economy, persistent weakness in the property sector and high youth unemployment rates, have led consumers to cut back on purchases, weighing on the country's retail and e-commerce sectors and prompting cut-throat competition for market share among e-commerce giants.
While Pinduoduo's low prices and steep discounts on everything from cleaning products to earphones have attracted cost-conscious shoppers, major rivals such as Alibaba 9988.HK and JD.com 9618.HK have also offered heavy promotions on their own platforms, piling competitive pressure on PDD.
"Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges," said PDD's Vice President of Finance Jun Liu.
UBS analyst Kenneth Fong said that while Pinduoduo was performing well, with good growth and profitability in spite of the highly competitive domestic e-commerce environment, management's tone was confusing for investors.
"Investors aren't sure if Pinduoduo sees what we don't see or if it's overly conservative in an uncertain macro environment," Fong added.
M Science analyst Vinci Zhang agreed that PDD management's outlook sounded "very bearish".
"We know there's a consumer spending slowdown, but there was hope that maybe PDD having the budget product platform with cheaper offerings can capture this slowdown, but it turns out that they are also losing," Zhang said.
Co-CEO Chen said consumers are increasingly choosing to spend on experiences rather than material goods and there is a "growing emphasis on rational consumption".
Chinese e-commerce giant Alibaba 9988.HK missed market estimates for revenue earlier this month, pinched by weaker domestic e-commerce sales, while JD.com's 9618.HK quarterly revenue grew only 1.2%.
Both firm's U.S.-listed shares also fell in the wake of PDD's earnings miss.
PDD reported revenue of 97.06 billion yuan ($13.64 billion) in the second quarter, compared with analysts' average estimate of 100 billion yuan, according to LSEG data.
Operating expenses rose by 48% in the three months ended June 30, as the company invested in marketing, advertising and promotions to attract shoppers.
General and administrative costs more than tripled in the quarter to 1.84 billion yuan, because of staff-related expenses.
($1 = 7.1173 Chinese yuan)
Reporting by Deborah Sophia in Bengaluru, Sophie Yu in Beijing and Casey Hall in Shanghai; Editing by Pooja Desai, Himani Sarkar, Barbara Lewis and Jacqueline Wong
Aset Berkaitan
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
