On Monday, Colin Huang saw his net worth drop by approximately $14 billion reducing his total wealth to $35.3 billion. This is a decline of more than 28% in a single day.
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Colin Huang was recognized as China’s richest person and has now fallen to the fourth position in the country and the 50th position globally.
He is now ranked behind Zhong Shanshan, Zhang Yiming and Ma Huateng in China’s wealth rankings.
PDD Holdings, the parent company of popular online marketplace Temu saw its stock plummet by nearly 30%, trading at around $97.35 by midday on Monday.
This is the stock’s lowest price in 2024, a contrast to its otherwise positive performance over the past year, where it had risen by almost 22%.
The sharp decline followed the release of the company’s second-quarter earnings report, which fell short of market expectations.
PDD Holdings reported diluted earnings of 23.24 yuan per share and sales of 97.06 billion yuan below the anticipated $14.1 billion in sales.
Jun Liu, Vice President of Finance at PDD acknowledged the slowing revenue growth attributing it to competition and external challenges.
CEO Lei Chen addressed the company’s willingness to endure short-term sacrifices as it continues to invest in its business.
Founded by Colin Huang in 2015, PDD Holdings quickly rose as a leading e-commerce platform in China.
The platform is known for offering ultra-discounted goods attracted millions of budget-conscious consumers both in China and abroad especially through its international brand, Temu.
Colin Huang’s rise to wealth was rapid with his net worth growing from an estimated $13.5 billion in 2019 to a peak of $55.3 billion in 2021.
Colin Huang wealth averaged around $38.9 billion in 2024 before this decline. Colin Huang stepped down as PDD’s chairman in 2021, but he remains a major shareholder in the company.
Temu was launched in September 2022, Temu is PDD Holdings’ is into the fast-fashion sector directly competing with established players like Shein, Amazon, Alibaba and JD.com.
The platform gained traction among budget-conscious consumers particularly in the US.
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PDD Holdings faces stiff competition from several major players in the fast-fashion and e-commerce sectors. Companies like Shein, ByteDance’s TikTok and Alibaba are targeting budget-conscious shoppers, a demographic that has traditionally fueled Temu’s growth.
This competition has eroded PDD’s market share but has also forced the company to rethink its growth strategies. Co-founder and Co-CEO Chen Lei acknowledged during a post-results briefing that the company’s growth rate is unsustainable and that a downward trend in profitability is inevitable.
PDD Holdings reported quarterly revenue of 97.1 billion yuan, which fell short of analysts’ estimates of $14 billion. This shortfall has increased investor concerns about the company’s ability to sustain its growth particularly in the face of increasing competition.
Despite generating a net income of $4.5 billion surpassing estimates of $3.9 billion, the revenue miss has cast a shadow over the company’s financial health leading to a huge sell-off of its shares.
The 28.5% drop in PDD’s share price to $100 is the company’s worst decline since 2022. This decline shows growing skepticism among investors regarding the sustainability of PDD’s business model in the increasingly crowded fast-fashion sector.
The American depositary receipts of PDD fell to $98.50, the largest single-day percentage decline on record for the company.
Colin Huang saw his net worth plummet by $14.2 billion in a single day due to the sharp decline in the company’s share price. Huang fell to fourth place with a net worth of $35.2 billion.
Both Temu and Shein have faced legal challenges and accusations of copyright infringement and unethical labor practices. As regulatory bodies in the US and EU ramp up their scrutiny of fast-fashion companies.
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