Chinese fast-fashion retailer Temu rocketed for two years – in just a few hours, its parent company lost more than $50 billion in market value

Shares of PDD Holdings, the parent company of fast-growing shopping app Temu, fell more than 30 percent on Monday, shedding more than $50 billion in market value after the e-commerce giant posted disappointing revenue results and executives warned of rapid competition. and non-business challenges that may detract from future growth and profits.

The Nasdaq-listed company, which is technically based in Ireland but has most of its workers in China, runs Chinese online shopping giant Pinduoduo as well as Temu, the discount shopping app that has taken the US and other western markets by storm since it launched in 2022. But Temu has also faced intense scrutiny from governments, including that of the US, over matters ranging from its use of import trade loopholes to the quality and origins of its sellers’ products through its online stores. And those pressures appear to be affecting the company’s outlook.

PDD continues to expand incredibly quickly in both China and other markets, with revenue up 86% in the second quarter to more than $13.6 billion, but analysts were expecting more than $14 billion in sales . In addition to this revenue loss, PDD executives spooked investors by giving a bleak picture of the coming quarters.

“Looking ahead, revenue growth will inevitably face pressure from intense competition and external challenges,” Jun Liu, PDD’s chief financial officer, said in a press release. “Profitability is also likely to be affected as we continue to invest decisively.”

Amazon officials in China recently told merchants there that the American e-commerce giant will soon launch its own discount storefront. Temu also competes with other e-commerce giants with deep ties to China, including fast-fashion titan Shein and fast-growing marketplace TikTok Shop.

While PDD Holdings does not break out Temu’s financial results, executives warned on a call with analysts of “significantly greater uncertainty” in the company’s global business unit, which houses Temu.

“Our operations (have) also become increasingly affected by non-business factors,” co-CEO Lei Chen said. “And in the meantime, the competition we face is getting stronger. Competition is here to stay and is expected to intensify in our industry.

“These combined factors will inevitably cause fluctuations in our business,” the executive added. “As this quarter’s results show, high revenue growth is not sustainable and a downward trend in profitability is inevitable.”

A boost for “high quality” traders.

Temu has become one of the most popular shopping apps in the US and other markets such as Mexico, thanks to its tempting cocktail of bargain prices, often acceptable product quality, and heavy advertising spend with in-app gimmicks that lure shoppers back. who enjoys bargain hunting. Temu calls Boston his headquarters, but wealth previously reported how it’s basically just the name.

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But the company has also come under increasing fire from regulators and lawmakers over some of its shipping tactics, adherence to product safety laws and questions about whether it sells goods made with forced labor.

Just this month, US lawmakers on both sides of the political aisle announced legislation that would make it more expensive for foreign companies like Temu to ship goods from China to American customers. Currently, most Temu orders shipped to the US avoid import duties and customs control thanks to a trade rule known as “de minimis” that allows customer packages under a threshold of $800 to avoid import costs.

PDD executives also promised to invest heavily in increasing the quality of sellers on its shopping marketplaces, in part by rewarding high-quality merchants with lower fees.

“On the supply side, we will invest substantial resources to support high-quality merchants who are willing to innovate and improve qualities,” Chen said. “And we will give these merchants a significant reduction in transaction fees, with an initial target of (the) $10 billion in the first year.”

This story was originally featured on Fortune.com