PDD Holdings Inc, which owns discount e-commerce platforms Pinduoduo and Temu, missed expectations on Monday for fourth-quarter revenue as China’s post-reopening consumer recovery remains patchy.

US-listed shares of PDD Holdings fell as much as 13.9 percent in premarket trading.

PDD reported revenue of 39.82 billion yuan ($5.79 billion) for the quarter ended Dec. 31, up 46 percent year-on-year, but this fell short of estimates for 41.01 billion yuan, based on Refinitiv data.

The group had reported 65 percent revenue growth in its third-quarter earnings last November.

PDD’s fourth quarter included only the first few weeks of China’s reopening from its strict zero-Covid rules in December.

The company’s revenue growth compares with single-digit gains reported by Chinese competitors Alibaba and JD.com for the same period, leading Bo Pei, an analyst at US Tiger Securities, to note that “investors do seem to be a bit overreacting to the miss.”

PDD Holdings chairman and chief executive Chen Lei told analysts on a call following the earnings announcement there was “strong resilience” in China’s consumption market in the quarter.

“Sales volumes of daily essential products on the platform showed steady growth, meanwhile consumer demand for high quality merchandise is growing, categories like mobile phones, beauty and cosmetics and baby products all had decent growth,” he said.

JD.com warned in March that consumer confidence in China would take time to rebuild amid economic uncertainties.

China’s total retail sales contracted 1.8 percent in December, while the country’s economic growth in 2022 slumped to one of its worst levels in half a century.

Discounting campaigns by rivals have also intensified competition for PDD, which has gained market share since it first came on the scene in 2015 by targeting price conscious consumers with discounted goods.

“We believe that healthy competition is beneficial to consumers and the entire industry but when competition intensifies, sometimes peers react [by going] in a different direction,” Chen said in an apparent nod to increased discounting in the market.

“We need to focus on our own healthy development and embrace industry competition even when sometimes it involves unsustainable practices from peers,” he added.

PDD’s fast-growing international platform Temu, which was launched in September to US shoppers, sells a variety of goods, from shoes, jewellery, electronics and homewares directly from Chinese merchants.

Temu’s gross merchandise value - the total sales before expenses - increased to $192 million in January from $3 million in September, based on analysis from data company YipitData.

Temu’s 2023 expansion will include rollouts in Canada, Australia, New Zealand and the UK.

“Different markets and different regions have many differences and we still have a lot to learn and a lot to improve,” Chen said.

By Casey Hall and Chavi Mehta; Editors: Shinjini Ganguli, Jane Merriman and Susan Fenton

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