PDD Holdings (NASDAQ: PDD) stock skyrocketed in early trading hours on Tuesday as the e-commerce platform reported better-than-expected revenues for the third quarter. Thanks to heavy discounts that boosted sales on its e-commerce platforms in China and international markets.
PDD reported sales of 68.8 billion yuan ($9.62 billion) for the September quarter, well above the analysts’ average estimate of 54.9 billion yuan. Net income also rose 47%.
Xiaoyan Wang, an analyst at 86Research, noted that Temu, the cross-border international platform, emerged as the primary revenue generator for PDD Holdings, outstripping domestic Chinese revenue growth at competitors Alibaba (NYSE: BABA) and JD.com (NASDAQ: JD) by a significant margin.
Analysts forecast Temu to generate over $16 billion in revenue this year. The platform, launched just over a year ago, has rapidly expanded its global footprint and is now available in 48 countries, including the United States, Europe, the Middle East, Southeast Asia, and Australia.
Deep discounts ahead of the Singles Day shopping event in China played a pivotal role in boosting demand for items on Pinduoduo. The platform leveraged its reputation for budget-friendly prices to attract more value-conscious consumers in the world’s second-largest economy.
Though there were expectations for a robust recovery in the Chinese retail market following the easing of strict COVID-19 restrictions late last year, Chinese consumers have maintained a cautious approach as the country faces macroeconomic headwinds, including a property market downturn and a historically high level of youth unemployment.
Chinese retail sales for September showed a 5.5% increase, following a 4.6% growth in August.
The net income attributable to ordinary shareholders surged to 15.54 billion yuan in Q3, compared to 10.59 billion yuan in the same period a year earlier.
PDD Holdings (NASDAQ: PDD) stock rose 16.34% to trade at $137.10 at the time of publication.