On May 27, following the release of its first-quarter 2026 financial results, PDD Holdings Inc. saw its U.S.-listed stock price drop by more than 13% at the opening.

The sharp reaction from the capital market reflects concerns over the company's slowing growth, pressure on profits, and an extended future investment cycle.

The financial report shows that PDD's first-quarter revenue reached 106.2 billion yuan, an 11% year-on-year increase but below the market expectation of 108.6 billion yuan. Net profit attributable to shareholders was 12.5 billion yuan, down 15% year-on-year. Non-GAAP net profit was 14.1 billion yuan, a 17% decrease, significantly lower than the market's projected 24.6 billion yuan.

Meanwhile, PDD's transaction services revenue reached 56.3 billion yuan, up 20% year-on-year, accounting for 53% of total revenue and surpassing online marketing services and other income to become the company's largest revenue source.

In the first quarter, PDD's online marketing services and other revenue amounted to 49.9 billion yuan, compared to 48.7 billion yuan in the same period of 2025, representing only about a 2% year-on-year growth.

Clearly, the slowdown in advertising business growth has directly dragged down overall revenue performance.

The decline in profits is linked to PDD's continued increase in investments.

The financial report indicates that PDD's total cost of revenue in the first quarter was 46.9 billion yuan, a 15% year-on-year increase, outpacing overall revenue growth.

PDD stated that the growth was primarily due to increases in fulfillment fees, bandwidth and server costs, and payment processing fees.

At the same time, the company's research and development expenses reached 4.4 billion yuan, up approximately 22% year-on-year.

Regarding future investment directions, management provided clear signals during the earnings call.

Co-Chairman and Co-CEO Chen Lei stated, "This quarter marks the beginning of a deep transformation in our business, internal processes, and organizational structure."

Another Co-Chairman and Co-CEO, Zhao Jiazhen, added, "Over the next decade, supply chain investment will be our core strategic focus," and the company will "allocate substantial resources to build its own brand business, creating new opportunities for supply chain partners."

In recent years, PDD's management has clearly identified supply chain development as a future strategic priority. In late March 2026, the company announced the establishment of New Pinmu, integrating supply chain resources from PDD's main platform and TEMU to explore a global self-operated model.

New Pinmu is a costly project, with an initial cash injection of 15 billion yuan already invested in the first phase. Over the next three years, PDD plans to invest up to 100 billion yuan in total.

Evidently, PDD is entering a new investment cycle, which also means short-term profit margins may continue to face pressure.

Based on current market reactions, investors are most concerned not with whether PDD "has growth," but rather whether it is entering a phase of "increasing revenue without increasing profits."

Especially after PDD explicitly stated its focus on supply chain investment over the next decade, the market has begun reassessing the company's profitability model.

For the capital market, the PDD that previously relied on rapid expansion through high growth and high profit margins is now transitioning into a new phase emphasizing heavy investment and operations. This shift has become a key reason for the weakened market sentiment following the earnings report.