Industry News

Throughout this earnings season, executives at consumer-facing companies have described a shopping public increasingly willing to search for value.

Lei Chen, co-CEO of Chinese Temu parent PDD Holdings ( PDD ), has a name for them: “rational” consumers, a term he used during his company’s earnings conference call on Monday after his company reported its latest quarterly results .

Consumers Balance Quality and Value

“On one hand, consumers are increasingly choosing experience-based consumption over material purchases,” said Chen during the call, a transcript of which was made available by AlphaSense. “On the other hand, there is a growing emphasis on rational consumption. Consumers are making more thoughtful decisions to balance quality and value.”

Chen didn’t invent the term, which crops up in a search of other recent transcripts and articles. A February story by Xinhua noted young Chinese consumers who were eschewing down overcoats for military-style cotton models.

PDD Faces Challenges, Shares Plunge

Still, it echoes comments from U.S.-based executives, who have reported shifting spending patterns here across income levels .

That dynamic is one of several factors challenging PDD, with Chen saying Monday that he foresees “many challenges ahead.” Those factors — including increased competition, among others – are expected to press revenue and profit margins, with Jefferies analysts today cutting their price target on the shares while maintaining a buy rating.

PDD’s U.S.-listed shares were hit hard Monday, sliding nearly 30% to 2024 lows. The stock was the biggest decliner in the Nasdaq Composite Monday.