UBS Group released a report stating that PDD Holdings (PDD.US) quarterly performance fell short of expectations. Revenue for the third quarter was 99 billion yuan, a year-on-year growth of 44%, but missed expectations by 3%. Adjusted net profit was 27.5 billion yuan, falling short of expectations by 7%, mainly due to gross margin pressures stemming from temporary adverse changes in its international platform Temu's product mix and merchant subsidies.

UBS Group pointed out that although PDD Holdings' performance was less than ideal, the impact on profit margins in the core market seems manageable or explainable at this stage, and the core e-commerce business remains healthy.

The firm believes that investors are likely to remain cautious about PDD Holdings, while the uncertainty of tariffs in the USA further clouds the short-term outlook for the stock. The firm prefers JD.com (JD.US) in the e-commerce sector.