Colin Huang, Founder of PDD, Experiences a Decline in Net Worth of Approximately $6 Billion

Colin Huang, the founder of Chinese e-commerce conglomerate PDD Holdings, suffered a $5.7 billion decline in his wealth overnight after the company's Nasdaq-listed shares plummeted on Tuesday following disappointing quarterly earnings.

The 45-year-old's net worth, linked to his equity in PDD despite resigning as chairman in 2021, currently amounts to $36.3 billion, as reported by Forbes.

Once the wealthiest billionaire in China in August 2024, the former Google employee has now dropped to the sixth position in the nation's wealth rankings.

PDD, the operator of the Pinduoduo e-commerce platform, which previously had quarterly sales and profit growth in triple digits, witnessed a 13.6% decline in its shares in the U.S. on Tuesday.

Revenue increased by 10% year-on-year to CNY95.7 billion (US$13.2 billion), however net income attributable to shareholders decreased by 47% year-on-year to CNY14.7 billion.

PDD executives have delineated numerous hurdles. Increased tariffs have affected its international Temu platform, while domestic competition is escalating.

PDD Chairman and co-CEO Chen Lei remarked in a call transcript that "radical changes in the external policy environment, such as tariffs, have exerted substantial pressure on our merchants," adding that merchants "frequently lack the capacity to adapt swiftly and efficiently," according to Forbes.

PDD has diminished merchant fees and augmented support, including marketing aid. In April, the business committed CNY100 billion over three years to enhance merchant support initiatives, anticipated to adversely affect profits.

Analysts assert that fierce competition among Chinese e-commerce companies exacerbates the challenges.

Eric Wen, head of research at Blue Lotus Capital Advisors in Hong Kong, emphasized that PDD encounters intense domestic rivalry from Alibaba and JD.com. These e-commerce behemoths are investing in "instant retail," striving to serve online orders within an hour or less to seize market share.

Huang founded Pinduoduo in 2015, characterizing it in its IPO prospectus as "a fusion of Costco and Disneyland," which highlights its "gamified" shopping application designed with engaging features to promote daily engagement.