Temu, China's slowdown and market distrust cause the giant to lose 29% on the stock exchange
Behind Tuesday's sharp loss is the drop in revenues, a consequence of the cooling of consumption in China but also the ostracism of Western markets for its lack of transparency
2' min read
2' min read
There is no peace for Temu, inside and outside China. Ostracised on foreign markets where it landed just two years ago, pulverising competitors with a fierce marketing strategy, in dispute for months with rival Shein which accused it of copyright infringement and fraud, on Tuesday the world's most invasive e-commerce platform plummeted on the stock market with a record 29% thud of shares of owner PDD Holdings that burned $55 billion in market capitalisation dragging more traditional competitors Alibaba Group Holding and JD.com with 5% losses in Hong Kong.
Investors, who look at accounts rather than legal diatribes, rejected the platform 'guilty' of underperforming revenues and a worrying outlook. The link to China's economic situation was stronger than the American legal battles against shoddy levels of merchandise on sale at ridiculous prices or the European Commission's censure over non-compliance with the digital directive protecting consumers.
Beijing's economy continues to slow down so much so that Temu's CEO Chen Lei himself has repeatedly said that revenues and profits will 'inevitably' decline as economic growth slows because 'we are facing many new challenges coming up, from changing consumer demand to intensifying competition and uncertainties in the global environment'.
Sure, the e-commerce company has outperformed its competitors with its low-cost products and thumping marketing but, now, it has to cash in on the difficulties of the Chinese economy, with the domestic market languishing, consumers who have not yet recovered from the real estate catastrophe and who are extremely cautious about opening their wallets.
This is beginning to weigh heavily on the accounts of the company that has been able to corner the phenomenon of the fast fashion platform Shein, which is at least a decade older, but not the evil spirits of the consumer market. While the CEO and his lieutenants remain confident about Chinese consumption in the long term, it is now the market that no longer trusts these new champions of Chinese e-commerce projected onto global markets.
