China’s Temu Parent Flexes Revenues, But Profits Are on a Diet

The Headline Numbers

PDD Holdings—the Chinese tech powerhouse behind Temu, the app that somehow convinces millions to buy neon socks, kitchen gadgets, and cat wigs they never knew they needed—just dropped its Q2 2025 earnings:

  • Revenue:  103.98 billion yuan ($14.5B), up 7% year-on-year, topping analyst forecasts.

  • Earnings per share:  22.07 yuan, crushing expectations of around 15.5 yuan.

On paper, Temu still looks like a Black Friday on repeat.

The Twist: Profits Slip

Despite the top-line success, profits didn’t share the party mood:

  • Net income: down 3.9% to 30.75 billion yuan.

  • Operating income:  plunged 21%.

Why? Because PDD has been spending aggressively—think of it as the corporate equivalent of maxing out credit cards to stay popular.

Why the Heavy Spending?

  1. The E-commerce Battle Royale
    Competing with Alibaba and JD.com means nonstop price wars, mega discounts, and marketing blitzes.

  2. End of U.S. Tariff Perks
    Temu’s earlier advantage from tariff exemptions expired, making cheap imports more expensive to sustain.

  3. Merchant Subsidies
    To keep sellers loyal (and shipping on time), PDD is handing out generous subsidies, which cut into margins.

Investors Still Smiling

Here’s the paradox: while profits dipped, PDD’s stock price has climbed 30–40% this year. Why? Because Wall Street sees the company’s scale and growth potential as more important than short-term margin pain.

In investor terms: “We don’t care if you’re spending—just keep growing.”

Quick Recap (for the skimmers)

What HappenedFunny Translation
Revenue ↑People keep impulse-buying $3 slippers and kitchen junk.
Profit ↓Selling cheap stuff isn’t cheap.
Spending ↑PDD = “Buy now, profit later.”
Stock ↑Investors love the more than the.

The Bottom Line

PDD Holdings is walking a tightrope: massive growth fueled by massive spending. For now, shoppers keep filling their carts, and investors keep cheering. But if costs don’t cool down, the Temu hype train could eventually run into a wall.


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