PDD Holdings (PDD) Stock: Mixed Q3 Results Send Shares Lower Despite Earnings Beat

TLDR

• PDD Holdings reported Q3 2025 revenue of RMB 108.3 billion ($15.2 billion), up 9% year-over-year but missing analyst estimates of RMB 109.3 billion
• Net income attributable to shareholders rose 17% to RMB 29.3 billion ($4.1 billion), with adjusted earnings per ADS of 21.08 yuan beating forecasts of 16.59 yuan
• Revenue growth improved from 7% in Q2 to 9% in Q3, breaking a trend of declining growth rates
• The company faces increased competition from Alibaba and JD.com in China, while Temu adjusts to U.S. tariff changes and new global competitors
• PDD stock fell 3.6% in premarket trading to $124.37 despite beating earnings expectations

PDD Holdings posted third quarter results that painted a complicated picture for investors. The Temu and Pinduoduo parent company beat earnings expectations but fell short on revenue.

The company reported adjusted earnings of 21.08 yuan per American depositary share for the quarter ended September 30. That represented a 13.4% increase from the same period last year. Analysts had expected just 16.59 yuan per ADS.

Revenue told a different story. PDD brought in RMB 108.3 billion, or $15.2 billion, for the quarter. While that marked a 9% jump year-over-year, it missed Wall Street’s target of RMB 109.3 billion.

PDD Holdings Inc., PDD

The market didn’t like what it saw. PDD stock dropped 3.6% to $124.37 in premarket trading Tuesday. The decline came despite the earnings beat and followed losses on Friday and Monday that pushed shares below their 50-day moving average.

But the competitive environment has intensified. The company’s domestic Pinduoduo platform faces pressure from Chinese consumer spending weakness and rivals like Alibaba Group and JD.com ramping up their efforts.

Revenue Growth Shows Signs of Stabilization

The 9% revenue growth rate actually represents an improvement from recent quarters. PDD had posted just 7% growth in Q2. Before that, the company saw 10% growth in Q1.

That marked a sharp deceleration from earlier periods. The company grew revenue 24% in Q4 2024, 44% in Q3 2024, and 86% in Q2 2024. Those quarters reflected Temu’s breakout growth phase.

The company earned RMB 53.3 billion from online marketing services, up 8% year-over-year. Transaction services revenue climbed 10% to RMB 54.9 billion.

Rising Costs Pressure Margins

Total costs of revenue jumped 18% to RMB 46.8 billion. The increase came from higher fulfillment fees, bandwidth and server costs, and payment processing fees.

Operating expenses held relatively steady at RMB 36.4 billion compared to RMB 35.3 billion a year earlier. Sales and marketing expenses actually declined slightly to RMB 30.3 billion.

Research and development spending surged 41% to RMB 4.3 billion. The increase reflected higher staff costs and technology infrastructure expenses.

Operating profit edged up to RMB 25 billion from RMB 24.3 billion in the year-ago quarter. Net income attributable to shareholders climbed 17% to RMB 29.3 billion.

The company generated RMB 45.7 billion in operating cash flow, up from RMB 27.5 billion a year earlier. Cash, cash equivalents and short-term investments stood at RMB 423.8 billion as of September 30, compared to RMB 331.6 billion at year-end 2024.

Temu faces its own challenges in international markets. The platform is adjusting to the elimination of the de minimis tariff exemption for small imports in the U.S. New competitors have also emerged in key global markets where Temu operates.

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