Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Why you should pay attention to the PDD earnings
Saxo
PDD Holdings, the parent company of surging online marketplace Temu, is releasing its earnings pre-market Wednesday. It is worth noticing as it has become the largest Chinese company listed in the US in terms of value. The growth expectations of PDD has also surpassed both Alibaba and JD.com, mainly due to two factors in its commercial model:
Low price: targeting price-sensitive personas and ensuring the supply chain of such goods.
Community groups: the existing e-commerce market is gradually becoming saturated, and it is increasingly difficult to get new customers. PDD's user growth strategy focuses on community group buying and has targeted similar personas of existing customers, which has proven efficient.
How Temu contributed to PDD becoming more valuable than Alibaba
In November 2023, PDD announced its latest quarterly earnings report, which far exceeded analyst expectations with a year-on-year revenue increase of 93.9%. The overall performance and the strong earnings led to the rise of PDD’s market value surpassing Alibaba, becoming the largest Chinese company listed in the US.
The main reason for this increase is the online marketplace Temu, which PDD launched less than two years ago, which has grown at a rapid pace. In December 2023, Temu became the world's second-largest e-commerce platform with 467 million unique visitors, second only to Amazon and on par with global e-commerce giant Aliexpress.
In 2023, Temu sponsored one of the largest sporting events in the world – the Super Bowl in the US – with the slogan "Shop like a millionaire". On the night of the event, Temu's app downloads surged by 45%, and the number of daily active users increased by 20%. During March and April 2023, Temu entered Australia, New Zealand, the UK, Germany, France, Italy, the Netherlands, and Spain showcasing their aggressive expansionary strategy.
Apart from expansion and growth, Temu performs in terms of platform stickiness. US shoppers spent almost twice as much time on Temu (18 minutes daily) as on major rival apps like Amazon (10 minutes daily) on average, according to data from research firm Apptopia.
Growth expectations
As PDD reports on Wednesday, apart from its Chinese domestic platform Pinduoduo, Temu will be the primary focus as it – so far – has driven the parent company’s performance. Looking at the revenue forecast for Temu it is clear that there’s high expectations to its performance. Temu's revenue in 2022 was USD 290 million, but is expected to reach USD 14 billion in 2023, and USD 30 billion in 2024.
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