(Yicai) Aug. 27 -- China’s PDD Holdings had its biggest one-day share decline since listing six years ago after second-quarter earnings growth slowed at the owner of discount shopping sites Temu and Pinduoduo and the firm warned of an “inevitable” drop in future profits.

After tumbling by as much as 31.5 percent in New York yesterday, PDD [NASDAQ: PDD] finished 28.5 percent lower at USD100 a share, its lowest closing price since the end of last September.

Net income surged 144 percent to CNY32 billion (USD4.4 billion) in the three months ended June 30 from a year earlier on an 86 percent jump in revenue to CNY97.1 billion (USD13.4 billion), the Shanghai-based firm’s trading report showed yesterday. First-quarter profit and revenue had soared 246 percent and 131 percent, respectively.

“As shown in this quarter's results, high revenue growth is not sustainable, and a downward trend in profitability is inevitable,” Co-Chief Executive Chen Lei said on PDD’s earnings conference call.

“We are seeing many new challenges ahead, from changing consumer demand, intensifying competition, and uncertainties in global environment,” he said. “As a result, we will enter a new phase of high-quality development that calls for increased investments, and our profitability will be affected as a result.

“We are prepared to accept short-term sacrifices and potential decline in profitability,” Chen said in a statement to accompany the earnings results.

A relative newcomer, PDD has grown rapidly thanks to low prices and subsidies on its e-commerce apps, swelling its earnings much faster than rivals Alibaba Group Holding and JD.Com. But the firm’s marketing practices have caused controversy. For example, it allowed shoppers to apply for refunds without returning goods in certain circumstances, resulting in vendors being “freeloaded.”

PDD also launched a merchant support plan yesterday to improve the platform's business environment, likely lowering the transaction fees of high-quality vendors by CNY10 billion (USD1.4 billion) next year. The company had said previously that they would get a service fee refund for reimbursed orders.

“We will invest heavily in the platform's trust and safety, support high-quality merchants, and relentlessly improve the merchant ecosystem,” Chen’s statement said.

New online anti-unfair competition regulations will come into force on Sept. 1, Zhang Yi, chief executive and chief analyst of iiMedia Consulting, recently told Yicai. Platforms must not impose unreasonable restrictions or additional conditions on merchant transactions, so e-commerce platforms may need to adjust their "refund-only" rules, he added.

Editors: Dou Shicong, Martin Kadiev