Temu, the e-commerce app owned by China’s PDD Holdings (PDD), has topped Apple’s (AAPL) list of the most downloaded free apps in the U.S. iOS store for the second consecutive year. This milestone indicates the growing dominance of Chinese apps in the world’s largest consumer market. Interestingly, ByteDance’s TikTok secured third place, despite regulatory uncertainty over its U.S. operations, while Shein, a major competitor of Temu and fast-fashion giant, ranked 12th.
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According to a CNBC report, citing data from StatCounter, Apple’s iOS app store accounts for over 56% of the U.S. mobile phone market, making the popularity of Temu’s app in this market significant.
Temu Has Disrupted the E-commerce Market in the U.S.
Temu entered the U.S. market in 2022 and has quickly disrupted the e-commerce market by offering low-cost goods shipped directly from China. Its meteoric rise has placed significant pressure on established players like Amazon (AMZN), forcing the e-commerce giant to adapt to changing market dynamics.
Temu Is Facing Rising Regulatory Challenges
However, Temu is facing rising scrutiny from U.S. regulators. Earlier this year, the Biden administration proposed curbing the “de minimis” provision. This provision allows shipments under $800 to be exempt from certain import duties.
The withdrawal of this provision could be a setback for companies like Temu and Shein, which heavily rely on it to keep prices low. According to a CNBC report, citing some experts, losing this exemption could significantly increase costs for these companies and reduce their competitiveness.
Furthermore, President Trump has proposed tariffs as high as 60% to 100% on Chinese goods. If these tariffs materialize, it could impact Temu adversely.
Is PDD Stock a Buy?
Analysts remain cautiously optimistic about PDD stock, with a Moderate Buy consensus rating based on eight Buys, five Holds, and one Sell. Over the past year, PDD has declined by more than 30%, and the average PDD price target of $140.47 implies an upside potential of 41% from current levels.
