How Temu parent PDD dethroned Alibaba to become China’s most valuable e-commerce company
Growth of PDD’s Temu marketplace has helped the comapny lead China’s e-commerce arena.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images
PDD’s value-for-money positioning and growth of its Temu marketplace has helped the company lead China’s e-commerce arena, analysts said, making it the country’s most valuable company in the segment.
PDD Holdings reported stellar first-quarter results on Wednesday last week, sending its shares surging as much as 7.5%, and driving its market-cap past that of rival Alibaba Group. PDD shares have more than doubled in value — up 109% — in the past year, according to LSEG data.
PDD, which also owns Chinese discount shopping app Pinduoduo has a market-cap of about $208 billion, compared with Alibaba’s $196 billion, according to LSEG data. JD.com is a distant third with a market-cap of $48 billion.
“We think Temu’s profitability will improve faster than previously estimated due to its introduction of the half consignment model, under which logistics costs will be borne by merchants,” Morningstar said in a note on Thursday.
“We also believe PDD’s domestic platform will be able to defend its position given the strong consumer perception of its value-for-money positioning,” Morningstar analyst Chelsey Tam said, adding that PDD comes up top in their preferences, while JD.com and Alibaba are in second and third spots respectively.
Goldman Sachs on Friday raised PDD’s rating to “buy” from “neutral,” noting the firm’s continued growth momentum in advertising revenue in the first quarter as well as Temu’s potential.
The upgrade comes “on the back of its adtech capabilities combined with China’s cost-competitive suppliers/merchants /supply chains alongside favorable risk-reward, with the current market cap implying no valuation ascribed to Temu,” Goldman Sachs analyst Ronald Keung said in the note.
The market has “now more than priced in” the two key concerns – domestic competition and U.S.-China tensions – which were behind our earlier downgrade on PDD in March, said Keung.
Stiff competition
PDD overtook Alibaba’s market-cap in the fourth quarter last year as well, but lost the top spot to Alibaba in the first quarter, according to LSEG data.
PDD on Wednesday reported that its net income attributable to ordinary shareholders in the March quarter surged 246% to $3.87 billion (27.99 billion Chinese yuan) from a year earlier, beating LSEG estimate of 12.86 billion yuan by a huge margin.
Revenue from transaction services, also known as merchant fees, came in at $6.14 billion, an increase of 327% from the same period a year earlier.
“We proactively responded to the consumption promotion policies and launched a series of promotional activities to meet users’ shopping needs during the spring festival and other seasonal events,” PDD said on its earnings call.
“We are confident in the consumer market in China,” PDD said.
Meanwhile, Alibaba’s net income attributable to ordinary shareholders in the March quarter plunged 86% to 3.3 billion yuan from a year earlier. Alibaba owns e-commerce platforms such as AliExpress, Alibaba.com, Taobao and Tmall.
PDD’s first major push overseas came with Temu in September 2022 whose popularity skyrocketed shortly after it aired a Super Bowl ad in 2023 that invited customers to shop “like a billionaire.”
Bargain-hungry Americans have been flocking to Temu, as it looks to continue growing rapidly in the U.S. Temu has also aggressively expanded into Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain, as well as the U.K.
BofA in a report earlier this month said Temu, TikTok and AliExpress are “leveraging the experience” of their parent and sister companies, adding that it considers Temu to be “relatively better placed” among the lot.
Clarification: The story has been updated to reflect that PDD reported results on Wednesday last week.
Chesnot | Getty Images
Dogecoin shot higher on Tuesday night, extending its postelection surge after President-elect Donald Trump formally announced the creation of the Department of Government Efficiency, which he referred to as “DOGE” in his statement.
Tesla CEO Elon Musk and Vivek Ramaswamy, former Republican presidential candidate and Strive Asset Management co-founder, will lead the department, Trump said in a statement. Together, they “will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Dogecoin was last up nearly 20%. It has been one of the biggest winners in the postelection rally, gaining 153% since election day compared to bitcoin’s 30% rise in the same period. It also shot past XRP this week to become the sixth largest cryptocurrency by market cap.
Dogecoin jumped after President-elect Donald Trump announced the creation of the Department of Government Efficiency, or “DOGE.”
Memecoins are seen as a gauge of retail interest and risk appetite in crypto. When memecoin activity ramps up, it usually indicates that retail investors are participating and have an appetite to speculate further out on the risk curve.
Trump initially floated the idea of an efficiency commission in September. Since then, Musk — who has called himself the “Dogefather” in the past and has been known to make public comments about the memecoin that influence its price — has posted on his social media platform X, referring to the commission as the “Department of Government Efficiency” or “D.O.G.E.”
Dogecoin gained relevance in 2021 following Musk’s endorsement and continuous hype on social media, which has since become a big catalyst for the coin. In May that year, Musk’s posts fueled dogecoin’s rally to its all-time high of 67 cents, per Coin Metrics. Though his appearance at the time on SNL, in which he called dogecoin “a hustle,” sent its price crashing down.
The rest of the crypto market was on pause from its postelection rally. Bitcoin was trading flat at about $87,000, after briefly touching $90,000 in late afternoon trading. Crypto stocks Coinbase and MicroStrategy were lower by 1% and 2%, respectively, in extended trading.
Elon Musk embraces Donald Trump during a campaign rally in Butler, Pennsylvania on Oct. 5, 2024.
Anna Moneymaker | Getty Images
President-elect Donald Trump said Tuesday that Elon Musk and former Republican presidential hopeful Vivek Ramaswamy will lead an efficiency group when his second term begins in January.
Trump wrote in a post that the Department of Government Efficiency, or DOGE, will “become, potentially, ‘The Manhattan Project’ of our time.” He also said the group would, “pave the way” for his next administration to “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Trump didn’t specify where cuts will take place or when the department may be formed. Congress hasn’t created or funded such an office. He said the group’s “work will conclude no later than July 4, 2026.”
Musk’s involvement in the envisioned group was previously promised by Trump and touted by the Tesla CEO, who spent an estimated $200 million backing the Republican nominee’s 2024 campaign, as a reason to put the former president back in the White House. Musk, who also runs defense contractor SpaceX, has reportedly been stationed at Trump’s Mar-a-Lago resort in Florida since Election Night.
Ramaswamy, who challenged Trump in the Republican primary, is co-founder of investment firm Strive Asset Management. He has opposed the widespread adoption of environmental, social and governance, or ESG, principles by companies.
Trump announced a number of other appointments Tuesday, including naming Fox News host Pete Hegseth as his pick for defense secretary and John Ratcliffe as CIA director.
The Spotify logo is displayed on a screen on the floor of the New York Stock Exchange on Dec. 4, 2023.
Brendan Mcdermid | Reuters
Spotify shares rose in extended trading Tuesday after the Swedish music streaming company issued a profit forecast for the fourth quarter that topped estimates.
Here’s how the company did, compared with what analysts expected:
- Earnings per share: 1.45 euros vs. 1.72 euros expected by LSEG
- Revenue: 3.99 billion euros vs. 4.02 billion euros expected by LSEG
- Monthly active users (MAUs): 640 million vs. 639 million expected by StreetAccount
While the company’s earnings and revenue for the third quarter trailed estimates, investors focused instead on guidance for the current period.
Spotify said operating income in the fourth quarter will come in at 481 million euros, exceeding the average analyst estimate of 432.7 million euros, according to StreetAccount. MAUs will increase to 665 million, while analysts were expecting 659.3 million, based on a StreetAccount estimate.
Still, revenue guidance trailed estimates. The company said sales will reach 4.1 billion euros, below the average analyst estimate of 4.26 billion euros, according to LSEG.
Subscribers to Spotify Premium, the company’s ad-free membership service that allows users to select songs on an unlimited basis, increased 12% year over year to 252 million, slightly ahead of estimates.
Spotify shares rose about 8% after the report to $452.35 after rising 2.2% in regular trading. The stock has more than doubled in value this year.
WATCH: Spotify is the platform for artists who want to break globally
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway