PDD’s Bloodbath Earnings vs. Alibaba’s Steady Climb: Is the Tide Turning in China’s E-Commerce War?
May 28, 2025 - If you blinked yesterday, you might have missed the carnage. **PDD Holdings (NASDAQ: PDD)**, the parent company of Pinduoduo and Temu, just dropped a financial bomb that sent its stock tumbling **17%** in a single day . Meanwhile, **Alibaba (NYSE: BABA)**, its archrival, has been quietly (well, relatively quietly) meeting expectations and even gaining ground in key areas like cloud and AI.
So, what’s really going on here? Is this the moment Alibaba finally reclaims its throne as China’s undisputed e-commerce king? Or is PDD’s bloodbath just a temporary stumble in its relentless rise?
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## **PDD’s Brutal Quarter: What Went Wrong?**
Let’s break down the disaster:
1. **Profit Nosedive** – PDD’s net income **plummeted 47% YoY** to RMB 14.7 billion ($2.05B), missing estimates by a mile . Even worse, **operating profit collapsed 38%**, proving that deep discounts and aggressive merchant subsidies aren’t free.
2. **Revenue Growth Slowing** – While revenue grew **10% YoY** (RMB 95.7B), it was far below the **24% growth** PDD posted just last quarter . Analysts expected **RMB 102.5B**, so this was a clear miss.
3. **Merchant Support Backfiring?** – PDD is dumping **RMB 100 billion ($13.8B)** into merchant fee cuts and subsidies to keep them competitive . Noble? Sure. Profitable? Not right now.
4. **Temu’s Tariff Troubles** – The U.S. tariff exemption on sub-$800 parcels helped, but global trade uncertainty is still hammering Temu’s margins .
**Bottom line:** PDD is spending like crazy to fend off competition, but investors aren’t happy with the short-term pain.
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## **Meanwhile, Alibaba Is… Actually Doing Okay?**
While PDD was getting mauled, Alibaba’s latest quarter was **far from perfect**—but it wasn’t a disaster either.
- **Revenue Miss, But Core Strength** – Alibaba’s sales (RMB 236.45B) slightly missed estimates, but **Taobao/Tmall grew 9%**, and cloud revenue jumped **18%** thanks to AI demand .
- **AI & Cloud Bet Paying Off** – Alibaba is dumping **$53B into AI infrastructure** over three years, and AI-related cloud revenue is growing at **triple digits** for seven straight quarters .
- **Stock Performance** – While PDD crashed **17%**, Alibaba’s stock is still up **48% YTD**—despite a post-earnings dip .
**Key Takeaway:** Alibaba isn’t exploding with growth, but it’s **stable, diversified, and executing** while PDD stumbles.
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## **Is This Alibaba’s Moment to Strike?**
Here’s the real question: **Does PDD’s weakness mean Alibaba can finally counterattack?**
- **PDD’s Aggressive Spending = Short-Term Risk** – If PDD keeps burning cash to prop up merchants, margins will keep shrinking. Alibaba, meanwhile, is **cutting non-core assets** and focusing on profitability .
- **Temu vs. AliExpress** – Temu is still growing fast, but tariffs and logistics costs are biting. AliExpress, though slower, has a more established global footprint .
- **AI & Cloud = Alibaba’s Secret Weapon** – While PDD fights price wars, Alibaba is building an **AI-powered ecosystem** that could dominate long-term .
**Final Thought:** PDD’s bloodbath doesn’t mean it’s doomed—this is still the company that outmaneuvered Alibaba for years. But for the first time in a while, **Alibaba looks like the safer, more disciplined play**.
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