Shares in Temu’s Chinese owner PDD Holdings plunged 13.9% on Tuesday after the e-commerce giant reported its slowest revenue growth in three years and a sharp drop in profit.
The dismal quarterly results come as Temu’s business model has been hammered by President Trump’s tariffs, including his end to the de minimis exemption, which allowed overseas fast-fashion firms to ship low-value packages into the US duty-free.
During a post-earnings call with analysts, Temu owner PDD Holdings’ Chair and CEO Chen Lei blamed a “radical change in external policy environments such as tariffs.”
The company made “substantial investments” to support merchants and consumers during this time, which “weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform,” Chen said.
PDD Holdings reported revenue rose 10% in the first quarter to 95.67 billion yuan, or roughly $13.31 billion. That marked its slowest growth since the start of 2022.
Net profit nearly halved during the same period, plummeting 47% to approximately $2 billion.
Analysts polled by FactSet had expected revenue of $14.49 billion and profit of $3.63 billion.
After Trump killed the trade loophole in April, Temu hiked prices across its website and pushed “local warehouses,” or US-based sellers with stockpiles of imported goods.
Since raising prices, there has been a notable decline in Temu’s US sales, Citi analysts said in a note earlier this month.
Imports worth less than $800 faced a 120% tariff when Trump lifted the de minimis exemption. The White House has since lowered this rate to 54%.
The majority of these packages can skip this fee, however, and pay the US’ lower 30% tariff on China because they are shipped through commercial carriers, according to a Reuters report.
It’s still a massive hit to Temu, which relied heavily on its ultra-low prices and speedy shipping to win over US customers.
Citi has slashed its annual revenue forecasts for the retailer by 0.6% in 2025 and 2.3% in 2026.
Meanwhile, PDD is facing challenges with its Pinduoduo platform in China amid a slowdown in consumer spending and a real estate market slump, as well as strong competition from peers Alibaba Group and JD.com.
“Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times,” Liu Jun, PDD’s vice president of finance, said.
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