(Yicai) Nov. 22 -- PDD Holdings’s stock price tumbled after earnings growth at the Chinese owner of discount shopping sites Temu and Pinduoduo slowed further in the third quarter.

PDD [NASDAQ: PDD] plunged 10.6 percent to end at USD104.09 a share in New York yesterday.

Net profit surged 61 percent to CNY25 billion (USD3.6 billion) in the three months ended Sept. 30 from a year earlier on a 44 percent jump in revenue to CNY99.4 billion (USD14.2 billion), the Shanghai-based company said in a financial report released the same day.

Profit and revenue decelerated from gains of 144 percent and 86 percent in the second quarter and 246 percent and 131 percent in the first three months of the year.

This “was partly due to intensified competition in the e-commerce sector and environment challenges faced by our business,” Chairman and Co-Chief Executive Officer Chen Lei said on PDD’s earnings conference call.

Co-CEO Zhao Jiazhen added: “The diverse and rapidly changing nature of the e-commerce sector, combined with our organizational limitations, has led us to miss certain macro opportunities.”

He highlighting PDD's slower adaptation to government policies, such as the home appliance trade-in programs, which spurred sector-wide growth during major promotional events such as the Double 11 shopping festival.

Third-quarter revenue growth was mainly driven by transaction services income, which climbed 72 percent to CNY50 billion from 234 percent surge in the prior quarter. Online marketing services and other revenue sources gained 24 percent to CNY49.4 billion, slowing by 5 percentage points.

Support for PDD’s merchants through its CNY10 billion fee reduction program, introduced in August, weighed on profitability, according to the firm. The initiative includes several measures such as service fee refunds, fee reduction for buy-now-pay-later services, lower security deposits, and an easier withdrawal process.

While helping to foster a healthier merchant ecosystem, according to PDD, the policy has slowed growth in online marketing revenue. “Our merchant-focused measures are part of a long-term strategy to enhance the platform's ecosystem, though they have inevitably had an impact on revenue growth over the short run,” Zhao said.

Despite the challenges, PDD is committed to strengthening its core capabilities, Zhao said. "We will further raise our standards, reinforce our supply chain, and continue to invest in creating a more robust platform ecosystem to provide consumers with better and more affordable products."

While PDD did not disclose financial figures for its overseas e-commerce platform Temu, the site continues to be a significant area of interest to the market, as it reaches more than 40 countries and regions.

"While our international operations are still in their early stages, we've seen significant growth over the past year," noted Chen. "Temu is poised to become a key growth driver as we expand into new markets and refine our supply chain offerings for global consumers."

Editor: Martin Kadiev