He was China's richest man for only 18 days... How 55 billion dollars evaporated overnight

Temu had risen to the top of the list of most downloaded apps. Those who downloaded the Temu app for the first time would receive a notification saying, "Shake your phone to win a gift." When the phone was shaken, a roulette-like image would appear, and coupons worth up to 200 dollars were gifted. Immediately afterward, another notification with the message "Make a purchase within 10 minutes and win another 100 dollars" prompted users to take action to buy something. Its competitors were not slow to respond to this fierce competition initiated by Temu. Amazon and Alibaba, the two largest e-commerce companies globally, also launched discount campaigns.

Governments also began taking measures to prevent companies flying their national flags from being harmed. For example, while Turkey reduced the customs duty exemption for products arriving by mail from abroad to 30 euros, efforts were initiated in the US—the world's largest country for household consumption by a wide margin—to reduce the exemption to 800 dollars.

QUARTERLY PROFIT HAD INCREASED BY 144 PERCENT

Chinese firm PDD Holdings, which owns the Pinduoduo platform along with Temu, announced its second-quarter results on August 26. The company's sales were 97 billion yuan, 86 percent higher than the same quarter last year. Quarterly profit had increased by 144 percent to 32 billion yuan. Cash assets were at the 285 billion yuan level.

According to the report in Oksijen, what happened during the teleconference attended by Wall Street analysts on Monday morning was the turning point. Answering analysts' questions, PDD Holdings co-CEOs Zhao Jiazhen and Chen Lei said they expected an inevitable decline in the company's profit in the coming period. Jiazhen stated, "There may be fluctuations in profitability in the coming period, but a decline in profit margins is inevitable in the long run." Chen Lei's words, "The time is not at all suitable for distributing dividends and buying back shares from the stock market," pulled the plug on PDD shares.

SHARES FELL TO AS LOW AS 98 DOLLARS

44-year-old Colin Huang, the founder of PDD Holdings, which also houses Temu, is the 48th richest person in the world with a fortune of 33.8 billion dollars. PDD shares, which entered the weekend on the Nasdaq at the 142 dollar level, crashed at the opening and fell to as low as 98 dollars. The shares, which hovered below 100 dollars throughout the day, were trading at the 102 dollar level in the pre-market session on Tuesday. With this sharp decline, 55 billion dollars of PDD's market value vanished in an instant. The company's value is still at the 138 billion dollar level. The company had closed 2023 with a value of 194.4 billion dollars.

The company's founder and largest shareholder, Colin Huang, had earned the title of China's richest person in August, when Temu was being talked about all over the world. Huang, who held this title for 18 days, fell to fourth place on Monday. Like many wealthy Chinese, Huang is a tech entrepreneur who fears the reaction of the Beijing administration. In 2020, he had distributed a significant portion of his shares in the company to charities and employees. According to sources close to the company, Huang did this out of generosity to maintain his "low-profile appearance," that is, to reduce his wealth.

News Source: 12punto