On January 29th, Morgan Stanley analysts released a research report stating that the rapid popularity of Pinduoduo's Temu shopping application in the United States may have reached its peak.

Affected by this, Pinduoduo's stock price fell 8.2% on Monday and closed at $130.15.

Although Temu has currently landed in multiple countries around the world, the United States remains its main market. According to market tracking company Sensor Tower, Temu had 123 million downloads in the United States last year, making it the most downloaded application in the region. Driven by Temu's rapid growth, its parent company Pinduoduo has also been sought after by the market. Last year, Pinduoduo's stock price soared by nearly 80%.

But the latest report from Simeon Gutman and Brian Nowak, analysts at Morgan Stanley, has poured cold water on the market. In the report, analysts cited third-party data indicating that Temu's momentum among American consumers is slowing down.

Morgan Stanley stated that according to the latest data, the number of households shopping on Temu continues to decline (now about 20% lower than September 2023), and future purchasing intentions are also lower than most other discount merchants/e-commerce platforms surveyed.

Although Temu still has millions of downloads per month, data on network traffic and application usage in the United States shows that since October last year, even during holidays, Temu usage has stagnated/slowed down. The download speed of applications now seems to be stagnant.

Morgan Stanley believes that Temu's growth in the US market may be more moderate this year. Morgan Stanley estimates that Temu's retail sales will increase by approximately 5% in 2023. This is higher than the retail giants Amazon and Wal Mart. However, overall, Temu's share of total retail sales in the United States is still relatively low, at only 0.2%. Therefore, considering the peak popularity rate, Morgan Stanley predicts that Temu's future incremental share growth may be more moderate.

It is worth noting that since Pinduoduo did not disclose specific information about Temu, the analysis of Morgan Stanley analysts is based on surveys and third-party data. And the latest report focuses on Temu in the United States, not the entire Pinduoduo.

Morgan Stanley also mentioned that current investors are still very interested in Temu.

Firstly, the popularity of Temu is very fast. Morgan Stanley estimates that about 15% of American consumers shop on Temu, and its GMV in the United States can reach 8-10 billion US dollars by 2023. Secondly, Temu offers a larger discount, usually more than 50% lower than its competitors. The third is that a large amount of marketing spending has greatly deepened consumers' impression of Temu.

According to data, Temu's marketing spending surged by 1000% in the first eleven months of last year. After achieving significant results in the Super Bowl last year, Temu plans to continue advertising on the Super Bowl this year. In addition, Temu has also spent a lot of money on advertising on social apps commonly used by Americans, such as Facebook and Instagram. In this situation, Morgan Stanley analyst Eddy Wang rated Pinduoduo as "overweight" with a target price of $181, which is nearly 40% higher than the current stock price.