PDD Holdings trades at 8.9 times earnings as France, Britain and seven US states move on Temu
France has charged Temu per item since September 1, the UK Budget lands on October 28 and seven US states are suing over the app. PDD's New York shares sell at a third of Alibaba's earnings multiple because no filing separates Temu from the group, so the case is underweight or wait for the numbers.
Vincent Jiang · 4 min read
France's parliament has passed a fast-fashion law that names the online marketplaces Shein and Temu as its principal targets, and its charges have been running since September 1 12. Britain's annual Budget, on October 28, is expected to make online marketplaces, Temu included, collect the value added tax owed by their sellers 3. Missouri Attorney General Catherine Hanaway sued the app's data practices on October 14 and says six other state attorneys general have sued too; no court has ruled 4. In a month, three governments have moved against the same business model.
The stock underneath is PDD Holdings−1.38% — PDD Holdings, down 1.38 percent today, Shanghai-run and Dublin-headquartered, owner of China's Pinduoduo marketplace, and outside investors hold it through its New York-listed ADR, a dollar share in the whole group. That ADR closed October 13 at 83.42 dollars, 40 percent below its 52-week high 5. The holder's problem precedes every lawsuit: PDD's filings do not separate Temu from the group 6, so none of the three fronts carries a number.
France charges by the item, Brussels by the parcel
The French fees scale with the catalog: 0.25 euros on socks, 12 euros on a coat, capped at half the item's pre-tax price and rising from 2030 7. France is the first EU state to penalize retailers by how many items they list, a formula that spares Zara and H&M 7.
Brussels added its own layer on July 1: 3 euros per product type on any parcel entering from outside the bloc, a channel that absorbed 5.9 billion low-value items in 2025 8. France stacks another 5 euros per parcel on top 8. Commission President Ursula von der Leyen names the intended winner, saying cheap imports have put Europe's 30 million retail workers at an unfair disadvantage 8.
Twelve days out, Britain makes Temu a tax collector
The Budget is expected to make marketplaces collect VAT directly from business sellers with turnover above 90,000 pounds, raising up to 1 billion pounds for the Treasury 3. Amazon−1.99% — Amazon, down 1.99 percent today backs the plan and puts the loophole at 700 million pounds 3. The gainers are named in the measure itself: the Treasury, and the high-street retailers whose rates relief the money funds 3.
The bill lands on a blind segment
When the US Securities and Exchange Commission asked PDD in 2024 how Temu differs from Pinduoduo, noting the two platforms were described in nearly identical terms, PDD's lawyers called Temu "an integral part" of the business "rather than a distinct business segment that is separately monitored and reported" 6. Separate figures for each platform, they wrote, would be "unnecessary" 6.
The group totals are the only window. The June quarter brought revenue of 16.5 billion dollars, up 13.9 percent, and net income of 4.0 billion, down 6.8 percent, the fifth profit decline in six quarters 9. America has already run the experiment: de minimis, the rule that let parcels under 800 dollars enter the US duty-free, ended in May 2025, and Temu's monthly US users halved, from more than 80 million to about 40 million 10.
PDD still grows revenue while profit has fallen in five of the last six quarters
- Revenue, y/y %
- Net income, y/y %
Data
| Revenue, y/y % | Net income, y/y % | |
|---|---|---|
| Q3 '23 | 89.2% | 43.2% |
| Q4 '23 | 118.7% | 141.3% |
| Q1 '24 | 119.5% | 228.9% |
| Q2 '24 | 85.4% | 143.9% |
| Q3 '24 | 50.1% | 67.2% |
| Q4 '24 | 21.2% | 14.8% |
| Q1 '25 | 9.6% | -47.6% |
| Q2 '25 | 8.6% | -2.6% |
| Q3 '25 | 7.4% | 15.7% |
| Q4 '25 | 16.9% | -12.5% |
| Q1 '26 | 16.9% | -10.4% |
| Q2 '26 | 13.9% | -6.8% |
The market's answer is an 8.9 multiple
The ADR trades at 8.9 times earnings against 24.6 for Alibaba−1.21% — Alibaba, down 1.21 percent today and 17.5 for JD.com−1.33% — JD.com, down 1.33 percent today, its larger Chinese rivals, and the street keeps cutting as profit falls: JPMorgan lowered its target from 110 to 95 dollars on September 10, and sixteen analysts average a Hold 511. The hedge fund Renaissance Technologies lifted its stake by 306 percent in the first quarter, so the discount has buyers 11.
PDD trades at about a third of Alibaba's earnings multiple
Data
| Value | |
|---|---|
| PDD Holdings | 8.87 |
| JD.com | 17.5 |
| Alibaba | 24.63 |
Local warehouses cut the parcel fee, not the exposure
Temu's answer is fulfillment inside Europe: 10 self-operated EU warehouses, a target of 80 percent of European orders shipped from within the bloc, air freight down to 35 percent of EU volume 8. Local stock dodges the border duty, but not the French per-item charges, the VAT collection or the lawsuits, and owning warehouses is the costlier way to serve a market where profit already falls 9. Astrada Advisors, a research firm staying neutral on October 5, argues the pivot from asset-light to asset-heavy compresses margins and merits a lower multiple 12.
What sizes it next
No source puts a figure on what the three fronts cost Temu, and PDD's reporting cannot produce one. Two dates could: the Budget prices the British front on October 28 3, and France's fee schedule steps up from 2030 7. Until one prints a number, or PDD gives Temu a line of its own, the position the record supports is underweight, or patience until the numbers land. The 8.9 multiple is the only running estimate of the bill.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
