Shares of Temu parent PDD Holdings dropped nearly 30% on Monday after the Chinese e-commerce giant warned its revenue will likely falter amid intensifying competition in the fast-fashion sector.

PDD co-founder Lei emphasized the company’s current growth was not sustainable as it battles competitors that included Shein, ByteDance’s TikTok and Alibaba for budget-conscious shoppers. 

“Competition is here to stay and is expected to intensify in our industry,” Chen told analysts during a post-results briefing, as reported by Bloomberg.

“High revenue growth is not sustainable, and a downward trend in profitability is inevitable.”

PDD fell 28.5%, to $100, the company’s worst decline since 2022.

The company has shelled out billions to build out its Temu business in the US, where it directly competes with fast-fashion giant Shein. 

Both companies have faced legal challenges and accusations of copyright infringement and unethical labor practices.

PDD reported quarterly revenue of 97.1 billion yuan, or $13.6 billion, which fell below analysts’ estimates of $14 billion. 

The company reported net income of $4.5 billion, above estimates of $3.9 billion.

Chen, who lost $14 billion in paper wealth from Monday’s stock dive, said PDD needed to invest more in its merchants as competitors try to win over and steal one another’s suppliers.

PDD Holdings CEO Colin Huang was China’s richest person last week, with a net worth of $49.3 billion – though that number plummeted to $35.2 billion on Monday, according to Forbes.

PDD has found success with its Temu business over the past few years as consumers – stung by stubborn inflation – turned to cheaper, fast-fashion goods online and abandoned traditional retailers. 

Temu is facing increased scrutiny from the European Union, which is reportedly working to undo an import tax loophole that allows companies like Temu and Shein to ship lightweight goods bought online for cheap.