Dingdong (Cayman) Limited (DDL) reported stellar financial results for the third quarter of 2024, with record revenue and profit growth. However, the company's stock plummeted 6.97% following the earnings release, as investors raised concerns about the sustainability of its rapid expansion and profitability.

The Chinese e-commerce giant's revenue surged 27.2% year-over-year to RMB 6.54 billion, driven by a 28.3% increase in gross merchandise value (GMV) and a 24.5% rise in the number of active transacting users. Dingdong achieved non-GAAP profitability for the eighth consecutive quarter and GAAP profitability for the third consecutive quarter, with non-GAAP net profit reaching RMB 160 million, over nine times higher than the same period last year.

Despite these impressive financial metrics, investors appear to be concerned about several factors that could impact the company's future growth and profitability. While Dingdong opened 80 new fulfillment stations to enhance delivery efficiency, the fulfillment expense rate remained relatively high at 21.4%, indicating room for further optimization. Additionally, the company faces challenges in maintaining high growth rates in regions outside its core markets of Jiangsu, Zhejiang, and Shanghai.