Alibaba, the renowned e-commerce giant founded by Jack Ma, is facing a significant challenge from a competitor that is rapidly gaining ground. This comes in the wake of a remarkable rally in the stock of PDD (PDD), the group behind the Chinese online shopping platform Pinduoduo and the US-based retail venture Temu.
PDD's third-quarter earnings report revealed a staggering 94% increase in revenue to 68.8 billion yuan ($9.7 billion) compared to the same period last year, with an operating profit surge of 60% year-on-year to nearly $16.7 billion (about $2.3 billion).
This impressive performance caused PDD’s stock in New York to soar, with substantial gains observed over consecutive trading days. As a result of these developments, PDD’s market capitalization has climbed to $195.9 billion, surpassing Alibaba's $190.5 billion for the first time, according to Refinitiv Eikon data.
This shift marks a significant moment in the e-commerce industry, as PDD, a relatively newer player, overtakes its well-established rival.
Alibaba's Response: A Call for Change and Innovation
The ascendancy of PDD has certainly caught the attention of Alibaba's employees and leadership.
In response to a post on the company’s internal forum about PDD closing in on Alibaba, founder Jack Ma called for change and innovation within his company. Ma's comments, as reported by a source familiar with the matter, emphasized the need for constructive feedback, innovative ideas, and a willingness to embrace the challenges posed by the new era of AI e-commerce.
Acknowledging PDD's recent success, Ma expressed his belief in Alibaba's potential for change and adaptation: “I firmly believe that Alibaba will change,” he wrote. “Everyone has been awesome, but those who can reform for tomorrow and are willing to pay any price and sacrifice are respected.
Back to our mission and vision, Alibaba people, come on!” Pinduoduo, founded in 2015, has also been making international waves with the launch of Temu, an affordable online superstore gaining popularity in markets like the United States and Australia.
Offering a range of products from home goods to electronics, Temu's success further underscores the competitive landscape Alibaba now navigates.