Shares of Temu parent company PDD plunges almost 29%; ‘too large a correction’, says analyst

Shares of Temu parent company PDD plunges almost 29%; ‘too large a correction’, says analyst

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The nearly 30% drop in shares of Chinese online retailer PDD Holdings is “too much of a correction,” according to Shaun Rein, founder and managing director of the China Market Research Group.

Speaking to CNBC’s “Street Signs Asia,” Rein said the “panic was overblown last night,” and that this would be a good opportunity for investors to buy into the stock.

His comments come after shares of PDD Holdings saw their largest one-day loss since listing on the Nasdaq, tumbling 28.57% on Monday after second-quarter results fell short of expectations.

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PDD Holdings reported second-quarter revenue of 97.06 billion yuan, or $13.6 billion, rising 86% from the same period the year before. But this fell short of Wall Street expectations for quarterly revenue of $14.034 billion, or 99.98 billion yuan, from analysts polled by FactSet.

PDD reported operating profit of 32.56 billion yuan, surging 156% from a year ago, while attributable income jumped 144% year on year to 32.01 billion yuan.

Rein said, “I actually think Pinduoduo is a good buy at 30% down, because it’s still growing. Well, it failed to hit expectations of analysts, but you’re still growing 20%, 30%, you’re still getting billions of dollars of revenue.”

Cautious statements

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Harburg said the Chinese e-commerce sector is currently saturated, and that PDD faces domestic competitors such as JD, Alibaba, and Shein. Globally, the firm is coming up against incumbents like Amazon.

This, combined with weak consumer growth in China, has resulted in a slump in the Chinese e-commerce sector, Harburg said, referring to weak second-quarter results from JD.com and Alibaba as well.

“So I don’t think this is isolated. PDD, in many ways, PDD was holding out longer than others,” he said.

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