(Yicai Global) March 21 -- Pinduoduo's shares tumbled after fourth-quarter revenue at the leading Chinese e-commerce platform fell short of the market consensus amid an end-of-year downturn in consumer spending in China.

Pinduoduo [NASDAQ: PDD] closed down 14.2 percent at USD78.91 in New York yesterday, after falling by as much as 18.3 percent earlier in the day. In pre-market trading today, the stock was down a further 1.6 percent as of 5.59 a.m. local time.

Revenue jumped 46 percent to CNY39.8 billion (USD5.8 billion) in the three months ended Dec. 31 from a year earlier, according to the Shanghai-based company's earnings report released yesterday, missing expectations by about USD140 million. Net profit jumped 43 percent to CNY9.5 billion (USD1.4 billion).

China’s retail sales fell in the final quarter of last year, but rebounded in the first two months of 2023. And while the Chinese government aims to boost consumption in the world’s second-largest economy this year, Pinduoduo is under pressure from discount campaigns at rivals such as JD.Com, which launched a 10 Billion Yuan subsidized shopping channel this month.

JD.Com, China’s second-largest e-commerce company, also cautioned earlier this month that the upturn in consumption still needs time to enter a full recovery.

For the full year, Pinduoduo’s revenue climbed 39 percent to CNY130.6 billion (USD19 billion) from the year before, mainly because of higher income from online marketing and transaction services, partially offsetting lower revenue from merchandise sales. Net profit soared 306 percent to CNY31.5 billion.

“We continued our technology focus with our annual research and development spending exceeding CNY10 billion,” said Finance Vice President Liu Jun. “We will further step up our investments in technology to drive sustainable growth of our company.”

Pinduoduo did not provide any guidance for the first three months of this year.

Pinduoduo launched the overseas App Temu in the United States last September and has entered other markets, including Canada, Australia, and New Zealand. The platform had 20.6 million average monthly active users in the US, according to global app market data provider Data.ai, formerly known as App Annie. 

Temu is still in the early development stage, and its financial impact was relatively small on the firm's fourth-quarter performance, Liu said, without disclosing any figures. “The most essential thing for us right now is to build our own unique value over the long run,” he said.

Temu's fourth-quarter operating loss may total CNY3.6 billion, according to research by China International Capital. Its revenue made a low contribution to commissions, but given its accelerating global expansion and aggressive customer acquisition, the report said Temu may reach a gross merchandise volume of USD9.3 billion this year, with an operating loss of CNY25 billion, if user retention and re-purchases increase steadily.

Editor: Martin Kadiev