Pinduoduo Faces Investor Scrutiny as Stock Plummets 23% Amid Compliance and Trust Crisis

Recently, Pinduoduo (PDD) has faced significant challenges, attracting attention from investors due to a notable decline in its stock performance. On April 8th, Pinduoduo’s stock dropped by 6.03%, marking a continuous fall over five days with a cumulative decline of 23.09%. This downturn took the stock to a new low not seen since September 2024, raising concerns among market participants.

As one of China’s most controversial yet dynamic internet enterprises, Pinduoduo finds itself in the midst of a multifaceted compliance and trust crisis. Domestically, there is intense competition concerning merchant rights, while the company’s cross-border platform, Temu, is embroiled in issues related to the European Union’s antitrust investigations, coupled with a surge in consumer complaints. Merchants within China have voiced dissatisfaction with Pinduoduo’s platform, especially regarding its punitive measures and lack of transparency in handling post-sale issues. These complaints highlight how the stringent penalty system has unfairly impacted numerous small and medium-sized businesses.

Pinduoduo’s expansion into overseas markets encounters its own barriers. In early 2025, the European Commission launched a new investigation against Temu, questioning alleged practices such as false discount promotions and forged user reviews, potentially leading to fines as large as 6% of its global revenue, thereby posing significant risks to its international operations.

Domestically, a court ruling found Pinduoduo guilty of unfair competition, ordering it to compensate a competitor, further increasing its legal and operational pressures. Simultaneously, Pinduoduo has seen its consumer complaints surge, ranked highest among major e-commerce platforms in China according to third-party data. Notably, its complaint resolution rate remains the lowest among peers, reflecting inadequacies in its governance and service systems.

In response to these challenges, Pinduoduo has proposed a substantial “Billion Yuan Support” plan to stabilize the situation. While this initiative may provide temporary relief to some merchants and boost consumer activity in specific markets, doubts linger regarding its effectiveness in resolving core issues of governance, compliance, and trust. In an era of slowing economic growth and intensified international competition, how Pinduoduo manages relationships with merchants and gains consumer trust remains crucial for sustained growth.

Investors are advised to stay cautious, adopting a wait-and-see approach while closely monitoring Pinduoduo’s efforts to improve compliance and governance. Should Pinduoduo successfully navigate its current internal and external challenges, its future growth potential remains promising. However, in the short term, increased market volatility and heightened regulatory risks necessitate careful consideration. In the long run, Pinduoduo’s attempts at ecosystem co-building will determine its transition from a price disruptor to an ecosystem contributor, influencing its competitive position in the future e-commerce landscape.