PDD Holdings Reports Mixed 2Q Results as Long-Term Investments Weigh on Short-Term Profitability

Temu Parent Company PDD Holdings Posts 2Q Miss, Analysts Say Long-Term Investments Hurt

Temu, the parent company of PDD Holdings, reported a 2Q miss, according to analysts, who say long-term investments are taking a toll on the company's short-term financial performance.

In its earnings report, Temu reported a net loss of $1.13 billion, or $0.45 per share, compared to net income of $1.23 billion, or $0.49 per share, in the same period last year. The company's revenue also missed expectations, coming in at $3.43 billion, down 14% year-over-year.

Analysts at Piper Jaffray noted that Temu's long-term investments in areas such as artificial intelligence, robotics, and electric vehicles are "eating into" the company's short-term profitability. "While we believe these investments will ultimately drive long-term growth, they are weighing on the company's near-term financials," the analysts said.

Despite the 2Q miss, analysts at JPMorgan maintained their "overweight" rating on Temu, citing the company's strong long-term growth prospects. "We continue to believe that Temu is well-positioned to benefit from the growing demand for e-commerce and digital payments in China," the analysts said.

Other analysts were more cautious, with analysts at Citigroup downgrading their rating on Temu to "neutral" due to concerns over the company's valuation. "While we believe Temu has strong long-term growth prospects, we think the stock is getting ahead of itself," the analysts said.

Temu's stock price has been volatile in recent weeks, falling by over 10% in the past month. However, the company's long-term growth prospects remain strong, with analysts expecting the company's revenue to grow by over 20% in the next three years.