PDD Stock Swings After the Temu Parent’s Earnings Smashed Expectations. Here’s Why.

Chinese company PDD Holdings owns the online retailer Temu. (Dreamstime)

PDD Holdings stock was heading higher after the parent company of retailer Temu reported quarterly earnings way ahead of expectations early Monday.

The share moves have been wild since the company reported before the bell. The American depositary receipts initially jumped 11% before falling back into the red. Once the market opened, they inched up.

PDD’s ADRs added 3% to $130.92. The earnings beat should help the stock, but worries that President Donald Trump’s tariffs could darken the outlook are holding it back.

Second-quarter adjusted earnings came in at $3.08 a share on revenue of $14.5 billion, beating expectations of $2.16 a share on revenue of $14.3 billion, according to FactSet.

Despite the big beat on the bottom line, adjusted EPS fell about 6% compared with the same period last year.

Sales grew 7% year-on-year. “Revenues growth further moderated this quarter amid intense competition, ” said Finance VP Jun Liu, adding that investments may continue to weigh on short-term profitability.

Companies with a large customer base in China have suffered from soft consumer demand. The world’s second-biggest economy has seen sluggish growth amid a property-market slump.

A trade war with the U.S. has also increased uncertainty for Chinese companies, with the latest trade deadline by the Trump administration now extended into late autumn.

JD.com , another online retailer, saw shares rise after it reported declining quarterly earnings that still beat expectations earlier this month, helped by its move into the food-delivery business. Alibaba is expected to report earnings later this week.

Write to Elsa Ohlen at elsa.ohlen@barrons.com