Thesis: spyware, analyst: grizzlyreports, sector: Chinese listing.
TEMU app software has the full array of characteristics of the most aggressive forms of malware /spyware. The app has hidden functions that allow for extensive data exfiltration unbeknown to users, potentially giving bad actors full access to almost all data on customers’ mobile devices. It is evident that great efforts were taken to intentionally hide the malicious intent and intrusiveness of the software. We engaged numerous independent data security experts to decompile and analyze TEMU app’s code, integrated with experts of our own staff, and analysts who have written independently in the public domain. Contributing to the danger of mass data exfiltration is the fast uptake rate of the TEMU app: over 100 million app downloads in the last 9 months, all in U.S. and Europe. TEMU is not offered in China. The TEMU app development team includes 100 engineers who built the Pinduoduo app, which earned a suspension from the Google Play Store. ( Link ) Pinduoduo app got reinstated by removing the “bad parts”, some of which were identically utilized as components of the TEMU app, strongly indicating malicious intent.We strongly suspect that TEMU is already, or intends to, illegally sell stolen data from Western country customers to sustain a business model that is otherwise doomed for failure. Cheap China shopping apps have previously proven that the business model is simply not sustainably profitable. Wish.com was a prominent case study and Shein an aggressive current competitor. TikTok has announced their entry into the space. TEMU is estimated ( Link ) to be losing $30 per order. Its ad spending and shipping costs (1-2 weeks from China, expedited to U.S. delivery) are astronomical. One is left wondering how this business could ever be profitable. TEMU is a notoriously bad actor in its industry. We see rampant user manipulation, chain-letter-like affinity scams to drive signups, and overall, the most aggressive and questionable techniques to manipulate large numbers of people to install the app.
A U.S. Congressional committee has already drafted HR 1153 which would seriously impair TEMU’s business model and/or empower the U.S. President to ban from the U.S. Allows the U.S. to punish TEMU for exfiltrating users’ personal data to China without knowledge or permission. Slam closed a loophole affording TEMU access to U.S. consumers with a free pass on postage, customs inspections or tariffs. U.S. businesses don’t enjoy symmetrical rights to the Chinese consumer market. TEMU is demonstrably more dangerous than TikTok. The app should be removed from the Google and Apple app stores.
We believe PDD’s financials are notoriously unreliable. Even the usually promotional sell side analysts have pointed out that PDD’s accounting is akin to a “Black Box” as disclosure becomes ever more opaque. Despite being a company with a market cap of appx $135 billion, PDD has not had a CFO since 2018. The key financial positions are a revolving door. There seems to be no accountability. The local audit partners from Ernst&Young Hua Ming LLP are in our judgment untrustworthy and have audited numerous Chinese companies whose shares have proven next to worthless in the past. Our analysis shows that PDD might have underreported its employee count to U.S. investors according to their own statements in China. Undercounting employees overstates profitability in reported financials. PDD has been reportedly involved in major order brushing scandals, and allegations that 7bn RMB of illicit gambling traffic was laundered routed through PDD’s platform.
Important operating metrics indicate PDD’s China business is rapidly declining while it loses a fierce battle with competitors such as Alibaba and JD. Alibaba’s regulatory issues in China seem to have been resolved in July 2023. Without the burden of regulatory intervention, we see this player taking substantial share from PDD. At the same time, JD is increasing its efforts to take market share from PDD and sees first indications of very promising results. Multiple data sources in China, as well as Goldman Sachs, have already reported that PDD’s daily average users (DAU) metric is starting to decline more rapidly. The year-over-year decline in DAU for the month of June is over 20%. This seems to us like a fast-deteriorating business.
PDD is a business that is run for the benefit of insiders rather than shareholders. PDD Holdings built a payments platform that it uses. However, management has carved out the entire payments business for itself (the AliPay playbook). We believe management has privately retained the most attractive part of the business for itself. A large number of shares are unaccounted for. Billions of USD worth of stock reportedly went “missing”. Some supposedly went to charity and some to venture capital investor. We see this absence of transparency as another red flag.
More ... latest change: 2026-02-28
Last updated: 2026-03-07 by automated standardization process