Temu’s explosive growth sees parent company PDD overtake Alibaba to become China’s most valuable e-commerce giant – Alibaba Gr Hldgs (NYSE:BABA), PDD Holdings (NASDAQ:PDD)

PDD Holdings Inc (NASDAQ:PDD) i Alibaba Group Holding Limited (NYSE:BABA) have played a key role in China’s e-commerce sector. PDD’s value for money strategy and Temu’s market development helped it surpass Alibaba in terms of market value, making it the most valuable company in the segment.

PDD Holdings reported impressive first-quarter results, increasing its shares by 7.5% and raising its market capitalization to about $208 billion compared to Alibaba’s $196 billion, CNBC reports.

PDD’s revenues more than doubled and profits almost tripled annually, driven by the strength of the domestic market and Temu’s international expansion.

Analysts attribute PDD’s success to its cost-effective approach and strong consumer perception. Analysts predicted further strength for PDD due to new markets and increasing penetration of open markets, particularly in Europe and Asia.

Morningstar highlighted the profitability of Temu’s “batch fishing” model and PDD’s solid market position.

Goldman Sachs upgraded PDD’s recommendation to “buy”, citing the growth dynamics of advertising revenues and Temu’s potential.

The market has now priced in concerns about domestic competition and tensions between the US and China. Analysts believe that China’s e-commerce is emerging as one of the more undervalued sub-sectors of China’s internet.

PDD’s March quarter net income increased 246% year-over-year to $3.87 billion, while transaction services revenue increased 327%. Meanwhile, Alibaba’s net income fell 86% to 3.3 billion yuan during the same period.

PDD has also made significant progress internationally with Temu, rapidly expanding into markets such as the US, Australia and Europe.

BofA noted Temu’s strong position among its competitors, leveraging the experience of its parent and sister companies.

Meanwhile, Alibaba remains committed to geographically diversifying its cloud computing business. In China, Alibaba Cloud had 39% market share compared to a global market share of less than 5%.

PDD shares have gained over 121% in the last 12 months. Alibaba shares gained more than 2%.

Reduction: PDD shares were down 2.46% at $146.03 before the open of trading on Wednesday.

Reservation: This content was created in part using AI tools and reviewed and published by Benzinga editors.

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