From Growth to Contraction—Is Pinduoduo Entering a “Twilight” Phase?

When a leading company begins to emphasize “long-termism,” it often signals near-term headwinds. On August 25, 2025, Pinduoduo delivered its most sobering half-year report to date: second-quarter revenue rose just 7% year-over-year, representing a sharp deceleration, while first-half revenue growth contracted from 104.49% in the same period of 2024 to 8.6% this year. Even more striking was the profit decline—net profit for the first half fell 24.18% year-over-year, a rare downturn for the platform.

Pinduoduo generated RMB 199.652 billion in revenue during the first six months of 2025. Although this remains a substantial sum, it marks a dramatic loss of momentum for a company accustomed to triple-digit growth. First-quarter revenue of RMB 95.672 billion grew 10% year-over-year, but in the second quarter, revenue reached RMB 103.980 billion with growth slipping to 7%. For Pinduoduo—whose annual increases once routinely exceeded 30%—this slowdown is tantamount to an emergency brake.

A breakdown of revenue streams reveals the core challenge. Online marketing services, Pinduoduo’s primary revenue driver, expanded 15% in Q1 and 13.4% in Q2, but the pace is clearly tapering. Transaction services, by contrast, exhibited near-stagnation: after a 6% gain in Q1, Q2 transaction revenue of RMB 48.28 billion was essentially flat compared to the prior year. Since transaction fees are linked to gross merchandise volume (GMV) and take rates, this plateau suggests either a leveling in GMV growth or deliberate adjustments to commission rates designed to support merchant retention.

If decelerating revenue growth portends a chill, the profit figures confirm a deep freeze. First-half net profit attributable to shareholders contracted by 24.18% to RMB 45.5 billion. Profit in Q1 plunged 47% to RMB 14.74 billion, before a modest rebound in Q2 to RMB 30.75 billion, still down 4% year-over-year. This squeeze is driven by sharply rising costs: cost of revenue surged 31%, far outpacing top-line gains, while sales and marketing expenses climbed 22.5% to RMB 60.61 billion and research and development spending grew 23.2% to RMB 7.17 billion.

Management has made clear that these investments are strategic. The “RMB 100 Billion Support Program” includes merchant subsidies, reduced commissions and expansion into western China, all intended to sustain platform vitality over the long term. A significant share of these funds has also been deployed overseas to fuel Temu, Pinduoduo’s cross-border e-commerce venture. Since its 2022 launch, Temu has pursued aggressive global expansion, subsidizing marketing, logistics and supply-chain infrastructure at scale, placing heavy pressure on short-term margins—a classic “invest to win” approach.

Domestically, Pinduoduo’s rapid growth ceiling is becoming visible. With incumbents such as Alibaba and JD.com rolling out large-scale subsidies and discount programs, Pinduoduo’s pricing advantage is eroding. Concurrently, content-driven platforms like Douyin and Kuaishou are diverting user attention and capturing share in the low-price segment that Pinduoduo once dominated. This intensifying competition has driven acquisition costs higher and made top-line growth more challenging.

Overseas markets still present opportunity, but Temu’s current model remains unprofitable, and the timeline to profitability is uncertain amid complex tariff regimes, geopolitical risks, localization hurdles and rivalry from established global players such as Shein and Amazon. Whether Temu can replicate Pinduoduo’s domestic success remains a pivotal question. A misstep could significantly weigh on corporate financials, while a breakthrough could deliver outsized returns.

In conclusion, Pinduoduo appears to be in a strategic holding pattern rather than facing immediate obsolescence. The company is trading short-term profit and growth metrics for the prospect of future market leadership. Although the era of effortless expansion has ended, Pinduoduo’s long-term narrative is far from over.