In the battle of Chinese giants, the relatively new app TEMU, which invested massive sums to penetrate the Western market, has overtaken the veteran shopping site AliExpress. TEMU now holds the highest market value in its sector, according to CNBC.
PDD Holdings, the parent company of TEMU, reported first-quarter results last week, causing its stock to soar by approximately 7.5%. This surge increased its market value to an impressive $208 billion. PDD's stock has more than doubled over the past year, with a 109% increase.
PDD, which also owns the Chinese discount shopping app Pinduoduo, now has a market value of about $208 billion, compared to Alibaba's $196 billion. JD.com ranks third, trailing significantly with a market value of $48 billion. PDD surpassed Alibaba in the last quarter of 2023, but since then, the dynamics have shifted, and TEMU's owner has regained the lead.
Last week, PDD reported that its net profit for the first quarter of 2024 surged by 246% to $3.87 billion compared to the previous year, vastly exceeding analysts' expectations.
In September, TEMU captured the Super Bowl finale with an advertisement emphasizing its low prices, featuring the slogan "Shop like a Billionaire." The company invests enormous sums in marketing and advertising, and in Israel, its ads are almost impossible to miss on various social media platforms, urging users to download the app. Following the Super Bowl ad, the company experienced a massive increase in app downloads and sales worldwide.
"We believe that Temu's profitability will improve faster than previously estimated due to the introduction of the semi-shipping model, which will shift logistics costs to merchants," said analyst Chelsea Tam.
Alongside its success, Temu has already raised concerns among cybersecurity experts worldwide due to fears of data collection.
"Apps collect vast amounts of data about all of us, and what happens when this data falls into the hands of an authoritarian government whose security and economic interests often clash with those of the West?" said Lindsay Gorman, Senior Fellow for Emerging Technologies at the Alliance for Securing Democracy, part of the German Marshall Fund, in an interview with Politico published last July.
Other allegations involved the theft of credit card information from customers. The Better Business Bureau, which rates businesses based on reliability and performance, reported receiving a "flood of complaints" from consumers claiming they experienced fraudulent withdrawals from their bank accounts or unauthorized credit card purchases shortly after making purchases on Temu. Additional complaints were directed at the company regarding poor quality and counterfeit products.