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On November 28, Beijing time, Temu’s parent company Pinduoduo released its third-quarter 2023 financial report. The financial report shows that as of September 30, Pinduoduo's Q3 2023 operating income was 68.84 billion yuan, a year-on-year increase of 94% , higher than the market expectation of 54.87 billion yuan; net profit reached 15.537 billion yuan, a year-on-year increase of 47%. ▲ The picture comes from Pinduoduo’s financial report Influenced by this news, Pinduoduo's US stock price soared nearly 20% at the close of the day, and its market value reached US$185.5 billion, which is only less than US$10 billion away from Alibaba's market value of US$194.3 billion. A single stone stirs up a thousand waves. According to reports, facing Pinduoduo's rapidly growing performance and market value, not only did Alibaba employees post on the internal network to lament, but even Alibaba founder Jack Ma made a rare response: congratulations to Pinduoduo, and at the same time, he firmly believed that Alibaba would change and Alibaba would reform. The latest news shows that as of the closing of the U.S. stock market in the early morning of December 1, Beijing time, Pinduoduo's market value had reached US$195.9 billion, surpassing Alibaba's market value of US$190.7 billion, becoming the number one stock in terms of market value among Chinese stocks listed in the United States, which once again aroused heated discussions in domestic and foreign media. As for the reasons why Pinduoduo achieved a significant increase in revenue this quarter, the relevant person in charge of Pinduoduo stated at the earnings conference that it was mainly due to the improvement in consumer sentiment and the results of Pinduoduo's high-quality development strategy , and did not mention its cross-border business. However, it is generally believed in the industry that in addition to domestic e-commerce business, Pinduoduo's overseas business Temu is also a major factor driving its revenue growth. To date, Pinduoduo has remained secretive about the specific data of its cross-border business. However, according to the financial report, in the third quarter of 2023, Pinduoduo's revenue mainly came from marketing services and transaction services. Among them, online marketing services and other revenues were 39.69 billion yuan, a year-on-year increase of 39% ; transaction service revenue was 29.15 billion yuan, a year-on-year increase of 315%. The market generally believes that the significant growth in Pinduoduo's transaction service revenue is mainly due to the incremental revenue brought by the rapid expansion of Temu's business. It is learned that since Temu landed in the United States in September 2022, it took less than a month to top the U.S. shopping app download list, and then started a crazy expansion mode. As of November this year, Temu has opened sites in more than 40 countries and regions around the world, covering Europe, America, Oceania, Latin America, Asia and other markets. According to 36Kr, Temu's sales in the third quarter of this year exceeded US$5 billion (approximately RMB 36.5 billion) . In September alone, the daily GMV reached US$80 million, which may exceed the annual GMV target of US$15 billion. Overseas analysts also predict that with the arrival of the year-end peak season, Temu may generate more than $16 billion in revenue this year. In the just-concluded Black Friday online promotion, it was also observed that many Temu sellers reported that they had seen a surge in orders. In addition, some analysts pointed out that in 2024, Temu's further growth and expansion in new countries or regional markets during the second half of fiscal year 2023 may drive Pinduoduo's steady revenue growth and continued improvement in operating efficiency. Therefore, after Pinduoduo disclosed its third-quarter financial report data, the industry generally believed that the cross-border e-commerce platform Temu is gradually becoming Pinduoduo's second growth curve. It is worth noting that the reason behind Temu’s soaring GMV is not only its absolute cost-effectiveness that has captured the minds of consumers, but also its high investment in marketing. According to foreign media reports, Temu plans to invest $1.4 billion in marketing activities in the United States this year and another $4.3 billion next year. Recently, there was news that Temu might spend a huge amount of money to appear in the American Super Bowl again. It is learned that in February this year, Temu spent tens of millions of US dollars to appear on the stage of the American Professional Football League Championship "Super Bowl", which is known as the "American Spring Festival Gala". The 30-second market, two loops and the brainwashing slogan "Shop like a billionaire" quickly made Temu leave a strong impression in the hearts of the 208 million "Super Bowl" viewers . According to SensorTower data, on the day of the Super Bowl, Temu's downloads surged by 45%, and the number of daily active users soared by about 20% compared to the previous day. Since then, Temu's downloads have continued to grow, and at the end of February, it directly surpassed US retail giants such as Target. This shows that the direct impact of Temu’s advertising performance in this year’s Super Bowl on its platform traffic cannot be underestimated. Perhaps having tasted the sweetness of the traffic boost from the "American Spring Festival Gala", on November 28th (US time), shortly after Pinduoduo released its latest financial report, an insider revealed that Temu will continue to appear in the "Super Bowl" to be held on February 11 next year and purchase multiple advertising units during the game. ▲ The picture comes from The Wall Street Journal As we all know, the "Super Bowl" has always been one of the most watched TV programs in the United States, but its high advertising prices are also well-known - the average advertising price per second is between US$200,000 and US$240,000. It is obvious that this plan will be a considerable advertising expense for Temu. Insider Intelligence analysts believe that Temu 's investment in the Super Bowl reflects its expansion strategy, which is to invest heavily in advertising with Pinduoduo's strong financial support, build its popularity, and then acquire a large number of customers to support its own operations and improve its industry competitiveness. From this point of view, the incremental revenue brought by the rapid expansion of Temu's business has indeed driven Pinduoduo's revenue to grow significantly, but at this stage, Temu's development still cannot be separated from the word "burning money". The financial report also shows that although Pinduoduo's revenue and profit both increased in the third quarter of this year, its net profit growth rate declined from the previous quarter. Many industry insiders believe that the decline in net profit growth from the previous quarter is closely related to Temu's large investment in marketing. In response, Pinduoduo executives said that the company is still in the development stage and the priority goal is to further strengthen the platform. Speaking of Temu, Pinduoduo CEO Chen Lei said: "Although the business scope has been expanded, Temu's business is still in its early stages and will face uncertainties. We are excited and curious about the opportunities and challenges brought by international development." At present, Temu is still relying on extremely low prices to capture the minds of consumers, coupled with viral marketing to attract traffic, but these traffic strategies obviously require huge capital to maintain. How long can they last? Whether Temu can rely on this period of high traffic to open up new growth points still needs a big question mark. What do you think of Temu? Welcome to discuss in the comments section~
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