Temu Parent PDD’s Spending Spree Slashes Profit

PDD Holdings Inc. (NASDAQ:PDD) stock gained Monday after the Temu parent reported mixed second-quarter 2026 results. Slower consumer demand in China and higher investments pressured profitability.

PDD Revenue Misses Estimates

Revenue rose 8% year over year to 112.4 billion Chinese yuan ($16.56 billion). However, the result missed the analyst estimate of $17.13 billion.

Revenue from online marketing services and other businesses increased 3.5% to $8.49 billion. Transaction services revenue climbed 13.3% to $8.07 billion.

The cost of revenue rose 4.7% to $7.08 billion. Operating expenses increased 13% to $5.4 billion, mainly due to higher sales and marketing costs.

Adjusted operating profit rose 5% to $4.3 billion. However, the adjusted operating margin narrowed to 25.87% from 26.68% a year earlier.

Net income fell 12% to $4 billion. Adjusted net income declined 13% to $4.2 billion.

Adjusted earnings fell to 19.33 yuan per American depositary share from 22.07 yuan a year earlier. Still, the figure beat the analyst estimate of 18.35 yuan.

Cash Position Remains Strong

The company ended the quarter with $67.3 billion in cash, cash equivalents and short-term investments. It generated $3.8 billion in operating cash flow.

PDD, a major rival to Alibaba Group Holding Ltd. (NYSE:BABA), continues to face weak consumer spending in China, intense competition and regulatory scrutiny.

PDD Prioritizes Trust and Merchant Support

Co-Chairman and Co-CEO Lei Chen said changing trade and regulatory conditions have created challenges and opportunities. He added that PDD aims to build a global platform that consumers can trust.

Co-Chairman and Co-CEO Jiazhen Zhao said PDD strengthened platform governance during the first half of 2026. The company focused on compliance, consumer protection and trust.

Vice President of Finance Jun Liu said the company increased ecosystem investments during the quarter. It also prioritized merchant growth and long-term industry development.

PDD Price Action: PDD Holdings shares rose 3.54% to $91.51 in Monday’s premarket trading, according to Benzinga Pro.

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