Shares of Chinese e-commerce giant PDD Holdings (PDD) are trading higher today despite news that unsafe items for kids can be found on its Temu and Shein websites, according to The Information. Although the U.S. has a law banning padded crib bumpers due to suffocation risks, Temu had these for sale in various styles and colors. Shein also listed drawstring hoodies for children, which pose a strangulation risk. Both platforms removed these items after being contacted by the news agency.
Temu and Shein have grown quickly by offering low-priced goods shipped from overseas. In fact, a quick look at Temu’s website traffic trends shows a substantial 205.4% increase on a year-to-date basis compared to the same period last year.
Unfortunately, this has complicated the U.S. Consumer Product Safety Commission’s (CPSC) efforts to regulate unsafe online products. As a result, CPSC commissioners mentioned in a congressional hearing the risks associated with sites like Shein and Temu and requested more funding to better monitor product listings and imports.
However, PDD’s companies are working to correct the issues. Indeed, Temu has removed the flagged items and launched an internal review, while Shein claimed they enforce swift action against non-compliant products and are expanding their safety and quality team. It is also worth noting that some of Temu’s baby products were mislabeled, like a baby lounger described as a pet bed, which likely caused the platforms to overlook such items.
Is PDD Stock a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on PDD stock based on 13 Buys assigned in the past three months, as indicated by the graphic below. After a 77% rally in its share price over the past year, the average PDD price target of $218.36 per share implies 51.08% upside potential.
