The PDD Holdings stock price remains in a bear market after falling by over 23% from its highest point since March this year. It was trading at $102.25 on Friday, also down by 37% from the highest level in 2024. This article explores the next PDD share target as Temu sales dive in the US.
Temu sales have plunged in the US
PDD Holdings, the parent company of Pinduoduo and Temu, is under intense pressure as concerns about tariffs continued.
The main concerns about the company is that Temu sales have collapsed in the United States, one of its core markets. According to Bloomberg, its weekly US sales have plunged by double digits.
Its sales dropped by over 25% YoY in the week between May 11 and June 8. This decline happened as the company boosted prices after Donald Trump’s tariffs ended the de minimis tax break that allowed small packages to enter the US tax-free.
Temu’s products were subjected to a tariff of 145% until the US and China reached a deal that brought them to about 10%.
More data by SimilarWeb shows that the share of US traffic to Temu’s website and applications has continued falling recently. The US share crashed by 58% in May, and has now been overtaken by Brazil, France, Mexico, and Germany.
In addition to tariffs, Temu sales in the US plunged because the company has reduced marketing spending in the US. It has moved from creating thousands to tens of thousands of new adverts per day before tariffs to dozens or single digits. Bloomberg noted that there are days that the company does not advertise.
Companies like Temu and Shein rely heavily on marketing to gain sales. While most of the traffic to Temu’s website is direct, over 25% of it comes from paid advertising, according to SimilarWeb data.
Temu has always been risky to PDD as we wrote here. That’s because, historically, companies using its business model have always struggled to thrive in a long time. A good example of this is Wish, a company that boomed a few years ago and then nearly collapsed. ContextLogic sold Wish.com for $173 million last year.
Read more: PDD stock: Temu growth and lessons from Wish.com
PDD sales are slowing
The most recent results showed that PDD Holdings revenue rose by 10% in the first quarter to $13.18 billion. Its operating profit plunged by 38% to $2.2 billion, while the net income dropped by over 47%.
The management believes that the business slowdown will continue as it scales and external challenges remain.
Yahoo Finance data shows that analysts anticipate that its second-quarter sales will be CNY 102 billion, up by 5.8% from the same period last year. Third-quarter sales will grow by 6% to 105 billion CNY, while the annual sales will be 428 billion CNY.
Still, the average PDD stock price forecast among analysts is bullish. The target price is $127, up from the current $102.25.
PDD stock price analysis
The weekly chart shows that the PDD share price has crashed from a high of $164.30 in 2024 to the current $102.25. It has moved below the 50-week Exponential Moving Average (EMA).
PDD stock has formed a symmetrical triangle pattern, with two lines nearing their confluence. The MACD indicator has moved below the zero line.
Therefore, the stock will likely have a big move in either direction in the coming days. If this happens, the next support and resistance levels at $80 and $125.
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