PDD Holdings, which operates Pinduoduo and Temu, missed market estimates for quarterly revenue on Thursday, as demand remained weak in its Chinese e-commerce business despite deep discounts and government stimulus to boost spending.

The company reported revenue of 110.61 billion yuan ($15.3 billion) for the three months ended December 31, compared with analysts' average estimate of 115.38 billion yuan according to data compiled by LSEG.

Net income rose to 27.45 billion yuan from 23.28 billion yuan in the same period a year earlier and PDD reported an adjusted profit of 20.15 yuan per American Depository Share, beating estimates of 19.81 yuan.

PDD’s US-listed shares rose 2% after an initial decline of 3.7% on Thursday.

The company is also facing stiff competition from e-commerce industry leaders Alibaba and JD.com, with both reporting better-than-expected revenues in recent weeks. PDD operates Pinduoduo only in China, and Temu internationally.

PDD has benefited from Temu's surging popularity in international markets - the shopping site's rock bottom prices on everything from clothing and home goods to electronics has attracted cost-conscious shoppers in major markets such as the U.S. and Europe.

But Temu faces a threat from possible changes to the U.S. de minimis policy, a trade perk that exempts imported items worth less than $800 from tariffs and customs procedures. The exemption has so far helped Chinese retailers such as Temu and Shein keep prices low and grab market share.

The number of de minimis shipments entering the U.S. from China hit 89 million in January, up 12% compared to a year ago, according to U.S. Customs and Border Protection data.

U.S. President Donald Trump last month moved to suspend the de minimis exemption, but paused the repeal after the rapid change created disruptions for customs inspectors, postal and delivery services and online retailers. Even amid that chaos, the number of de minimis shipments from China recorded a slight increase in February compared with the same period in 2024.

($1 = 7.2421 Chinese yuan renminbi)