Temu US Daily active users plunge Pinduoduo shares suffer
Youdaoplaceholder0 In May 2025, e-commerce dark horse Temu faced unprecedented challenges in the US market. According to multiple data sources, the daily active users of Temu’s US site have witnessed an astonishing plunge this month, with a decline of as much as 58%. Meanwhile, the share price of its parent company, Pinduoduo, has also been severely dragged down, dropping significantly and drawing widespread attention from the market.
Temu, an e-commerce platform that once swept the US market with its rapid growth and low-price strategy, was once regarded as a key factor in boosting the market value of Pinduoduo on the US stock market. However, the current severe setback in the US market undoubtedly casts a shadow over its future development.
Looking back on Temu’s development history, the US market is undoubtedly where it made its fortune. For a long time, the US market contributed more than half of Temu’s traffic and was an important pillar of its global business. However, with the United States’ cancellation of the “tariff exemption policy for goods worth no more than $800”, Temu’s costs rose sharply, forcing it to largely shut down its “fully managed business” and switch to a “semi-managed business”. This transformation led to the forced increase in the prices of Temu’s goods, thereby losing its long-proud advantage of low prices.
Low prices were once the nuclear weapon that enabled Temu to forge ahead in overseas markets. However, once this weapon was lost, consumers began to vote with their feet and withdrew from its App one after another. According to data from Sensor Tower, Temu’s daily active users in the United States have plummeted by 58%, a figure that is undoubtedly shocking. According to the research results of Bain &Company, since the Trump administration imposed tariffs, both the sales volume and the growth rate of users of Temu have declined significantly.
Apart from low prices, advertising is also one of the important factors that have blown up Temu’s huge balloon. In order to gain a firm foothold in the US market, Temu spared no expense in placing a large number of advertisements on channels such as Google, Facebook and YouTube. According to an insider from a first-level agent of Facebook in China, Temu spent as much as several billion yuan on advertising through its company. However, under Trump’s new tariff policy, Temu’s low-price strategy failed, and the huge push it generated by burning advertisements also became useless. Therefore, Temu had to start to stop a large number of advertisements.
Mike Ryan, the director of the marketing company Smarter Ecommerce, pointed out that Temu began to shut down all Google Shopping advertisements in the United States on April 9th. According to Sensor Tower’s estimation, during the two weeks from March 31 to April 13, Temu’s average daily advertising expenditure on Facebook, Instagram, TikTok, Snap, X and YouTube (in the United States) decreased by 31% overall compared with the previous 30 days. On many channels, Temu’s advertising expenditure has even dropped sharply to zero.
This series of changes has led to a significant decline in the ranking of Temu’s App on the App Store. The sharp drop from the previous top or second or third place to the 58th position is undoubtedly a heavy blow to Temu’s influence in the US market. Without the support of “low prices” and “advertising”, Temu’s huge balloon shrank rapidly as if pricked by a needle.
02. Challenges of the “Burning money to gain the market” model
The rise of Temu is largely attributed to its continuation of Pinduoduo’s “burning money to gain market share” logic. The core of this strategy lies in pleasing consumers through losses first, leaving a deep impression in their minds, and securing a place on their mobile phones (apps). Over time, this combination of “impression + location” gradually solidifies into an intangible fixed asset, capable of continuously attracting visits and repeat purchases. However, this logic has failed in the mature market of the United States.
With the sharp decline in the number of App visits and orders, the intangible fixed assets that Temu once believed could generate continuous returns are also depreciating rapidly. This not only poses a threat to Temu’s position in the US market, but also raises questions about whether its “burning money to gain market” logic is equally effective in other markets.
Despite this, Temu has not halted its pace of global expansion. At present, it is marching rapidly in the Latin American and European markets, among which Brazil, Mexico and Germany have become its three main markets. The proportion of traffic contributed by Brazil to Temu has risen to 14.27%, second only to the United States. Mexico ranked after Brazil with a share of 7.06%. Germany ranked fourth with a share of 4.29%. These data indicate that Temu has achieved certain results in these emerging markets.
However, the “burning money to gain the market” approach of Temu and its peers has also raised the alarm of the authorities in markets such as Europe. These markets have begun to consider imposing taxes on small packages to cope with the possible impact of the flood of low-priced small packages. Europe is worried that this flood will shift from the United States to its own land, while manufacturing-dependent Brazil and Mexico are also concerned that low-priced goods will erode the competitiveness of their domestic enterprises.
The European Union has responded by planning to impose a fixed fee of 2 euros per small package directly delivered to residents’ homes and is expected to completely abolish the tax exemption policy for small packages by 2028. Brazil even began to impose a 20% import tax on imported goods worth no more than 50 US dollars as early as August 1st last year, and added the goods and services turnover taxes of each state. Mexico has also imposed tariffs of 17% to 19% on small goods imported through express delivery. In addition, after the United States abolished the tax-free policy for T86 small packages, the entire G7 group has also begun or plans to impose taxes on small packages.
The implementation of this series of new tariff policies and restrictive measures has undoubtedly brought tremendous pressure to Temu’s “burning money to gain market” model. In the future, whether Temu can continue to succeed in these markets will depend on whether it can adapt to the new market environment and adjust its strategies.
03. Can Temu still be a contributor to Pinduoduo?
Since its birth, Temu has grown at an astonishing rate and was once regarded as the hero who pushed up the market value of Pinduoduo in the US. However, behind its rapid growth lies the continuous financial support from Pinduoduo. This wild growth and massive blood transfusion have led to less optimistic results: Temu has become regarded as an “excess capacity exporter” in the eyes of many countries and has been restrained. Meanwhile, the strategy of “low prices (subsidies) + advertising” has also raised Pinduoduo’s costs and sacrificed its profit margin.
Pinduoduo’s first-quarter financial report for 2025 shows that its marketing expenses reached 33.4 billion yuan, a sharp increase of nearly 10 billion yuan compared to the same period last year, and also rose by 2 billion yuan compared to the peak e-commerce season in the fourth quarter of last year. This is mainly because Pinduoduo has fallen into a situation of burning money on both domestic and international fronts. In China, it needs to deal with the subsidy war between Alibaba and JD.com. Abroad, after suffering setbacks in the United States, Temu was eager to spend a lot of money on advertising in Europe, Latin America and other places to make up for the lost market share.
This series of impacts led to Pinduoduo experiencing a “double miss” situation in terms of revenue and profit in this quarter. Revenue was nearly 6 billion lower than market expectations. The overall operating profit plummeted by approximately 38% year-on-year, falling short of the seller’s expectations by over 9 billion yuan. This profit decline was so significant that it was even regarded by the outside world as a “blow up”.
At present, Pinduoduo’s main site business in China has fallen into a situation of slowing growth. Meanwhile, JD.com and Alibaba have been constantly increasing subsidies and persistently engaging in price wars with them. This has forced Pinduoduo to increase subsidies and investment on its domestic main site. Meanwhile, after suffering setbacks in its largest market, the United States, Temu also needs to continue its “burning money to gain market” model in markets such as Latin America, Europe, and Japan. Although e-commerce is all about efficiency, Temu will naturally continue to play the role of Pinduoduo’s “efficiency gene”. However, when it grows large enough, there is still great uncertainty as to whether it will face stricter overseas constraints.
Doing e-commerce, especially for Chinese people, is very likely to fall into the track of “strong competition, weak barriers and low valuation”. As Pinduoduo’s domestic business gradually becomes mediocre, it remains to be seen whether Temu can continue to be a contributor to Pinduoduo’s growth. In the future, both Temu and Pinduoduo need to seek new growth points in the new market environment and adjust their strategies to adapt to new challenges.