The founder of PDD Holdings Inc., Colin Huang, recently lost his position as the richest person in China as a result of an abrupt drop in his company’s stock price.
The giant of online shopping Temu is owned by PDD Holdings, whose stock collapsed on Monday, wiping out $14.1 billion of Huang’s fortune in a single day—his greatest loss to date.
According to the Bloomberg Billionaires Index, Huang, who temporarily held the top spot among China’s richest people on August 8, is currently ranked fourth with a net worth of $35.2 billion. With $50 billion under his belt, bottled water tycoon Zhong Shanshan regained the title of richest person in China.
Following the announcement of quarterly revenue that was below analysts’ estimates and a warning of slowing sales growth, PDD’s stock experienced a severe fall. In a conference call with investors after the earnings announcement, CEO Chen Lei stressed how unsustainable their present growth trajectory is.
Rivals that target consumers on a tight budget include Alibaba and ByteDance, the company that controls TikTok. The company’s US-listed shares saw the largest decrease in history as a result, plunging a stunning 29%.
Adding to investor concerns, PDD’s management stated they do not foresee any share buybacks or dividends in the coming years, citing ongoing challenges and uncertainties.
Chen explained that the intense competition and external pressures make it unwise to pursue these financial strategies in the near future.
Huang founded PDD in 2015, quickly rising through the ranks of global wealth thanks to his innovative approach to e-commerce.
The platform, known for its low-cost products and heavy promotions, gained massive popularity, particularly among price-sensitive consumers during times of economic uncertainty.
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It expanded internationally under the Temu brand and became one of the most downloaded apps in the US following its launch in 2022, challenging major players like Shein and Amazon.
Despite its trying harder to succeed, PDD has faced significant challenges. Earlier this year, hundreds of small vendors protested outside PDD’s offices in China, alleging unfair penalties imposed by the company.
Meanwhile, new regulations in Europe and the US could threaten PDD’s business model, including proposed changes to import tax rules that currently benefit low-cost online goods.
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In summary, Colin Huang’s rapid ascent to the top of China’s wealth rankings was quickly undone by a sharp drop in his company’s stock, driven by disappointing financial results and fierce competition in the e-commerce market. As PDD navigates these turbulent waters, the company faces a challenging road ahead.
