The CEO of Temu’s Parent Sees a ‘Rational’ Consumer Out There

Throughout this earnings season, executives at consumer-facing companies have described a shopping public increasingly willing to search for value.

Lei Chen, co-CEO of Chinese Temu parent PDD Holdings (PDD), has a name for them: “rational” consumers, a term he used during his company’s earnings conference call on Monday after his company reported its latest quarterly results.

Consumers Balance Quality and Value

“On one hand, consumers are increasingly choosing experience-based consumption over material purchases,” said Chen during the call, a transcript of which was made available by AlphaSense. “On the other hand, there is a growing emphasis on rational consumption. Consumers are making more thoughtful decisions to balance quality and value.”

Chen didn’t invent the term, which crops up in a search of other recent transcripts and articles. A February story by Xinhua noted young Chinese consumers who were eschewing down overcoats for military-style cotton models.

PDD Faces Challenges, Shares Plunge

Still, it echoes comments from U.S.-based executives, who have reported shifting spending patterns here across income levels.

That dynamic is one of several factors challenging PDD, with Chen saying Monday that he foresees “many challenges ahead.” Those factors — including increased competition, among others – are expected to press revenue and profit margins, with Jefferies analysts today cutting their price target on the shares while maintaining a buy rating.

PDD’s U.S.-listed shares were hit hard Monday, sliding nearly 30% to 2024 lows. The stock was the biggest decliner in the Nasdaq Composite Monday.