The shares of PDD Holdings, the parent company of the e-commerce platforms Pinduoduo and Temu, fell by nearly 9 percent on Thursday after the company announced weaker-than-expected sales figures and warned of intensified competition in the sector.

In the third quarter, revenue rose by 44 percent to 99.4 billion RMB (13.7 billion USD), but missed analysts' expectations of 102.8 billion RMB. Net profit increased by 61 percent to 25 billion RMB, but adjusted earnings per American Depositary Share (ADS) were below estimates at 18.6 RMB.

The results of PDD follow disappointing quarterly reports from competitors JD.com and Alibaba, highlighting the pressure of weak consumer demand in China. The combination of high unemployment – especially among young people – and a persistent real estate crisis has significantly strained consumer confidence. This forces China's e-commerce companies to adopt more aggressive price cuts and marketing strategies to attract price-sensitive buyers.

Chen Lei, Chairman and Co-CEO of PDD, commented: "Profits fell in the third quarter due to intensified competition in the e-commerce sector.

While PDD focuses on "high-quality development" in line with Beijing's political priorities, Alibaba undertakes a strategic restructuring by merging its domestic and international e-commerce businesses. The goal is to increase profitability and make it easier for merchants to access new markets.

PDD, on the other hand, continues to face public pressure. In July, hundreds of angry merchants gathered in front of the Temu office in Guangzhou to protest allegedly unfair fines and withheld payments. PDD stated it has invested billions to support merchants, including lower transaction fees and improved customer service.

PDD's international platform Temu, launched in 2022, has become a serious challenger to Amazon in the USA and Europe. With aggressive discount offers and intensive online marketing, especially on Meta and Google platforms, Temu displaced Amazon as Google's largest advertising customer.

However, Temu's business model – shipping goods directly from Chinese warehouses to Western consumers – has drawn regulatory attention. Both in the USA and Europe, there are calls to end tax exemptions on Temu packages. Additionally, the EU Commission launched an investigation last month into whether the platform adequately combats the sale of illegal products.