(Yicai) May 28 -- Shares of PDD Holdings tumbled after the Chinese owner of discount shopping sites Temu and Pinduoduo reported a 47 percent profit drop for the first quarter of this year, mainly because of more spending to support merchants and consumers.

PDD [NASDAQ: PDD] closed 13.6 percent lower at USD102.98 a share in New York yesterday.

Net profit was CNY14.7 billion (USD2 billion) in the three months ended March 31, the Shanghai-based e-commerce giant said in a financial report late yesterday. Revenue rose 10 percent to CNY95.7 billion (USD13.2 billion) from a year earlier.

Based on non-generally accepted accounting principles, net profit tumbled 45 percent to CNY16.9 billion. That was worse than analysts' forecast of CNY27.9 billion.

"In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment," said Chen Lei, chairman and co-chief executive officer of PDD. "These investments weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform."

PDD significantly reduced deposit requirements for several product categories, including home appliances and digital goods, to improve its business environment last quarter. The measures serve as a long-term strategy, but they have impacted income from advertising and commission, the company pointed out.

Revenue from online marketing services rose 15 percent to CNY48.7 billion, while that from transaction services climbed 6 percent to CNY47 billion, PDD noted. In comparison, the former rose 17 percent in the fourth quarter of last year from a year earlier, while the latter jumped 33 percent.

PDD's operating expenses soared 37 percent to CNY38.6 billion last quarter, mainly due to higher sales and marketing costs.

"As communicated previously, a slowdown in growth rate is expected as our business scales and challenges emerge," noted Liu Jun, vice president of finance of PDD. "This trend has been further accelerated by the changes in the external environment in the first quarter.

"Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times," Liu added.

"Amid growing uncertainties, we see enhanced merchant support as essential to building a healthy merchant ecosystem that can deliver satisfactory shopping experiences for consumers," said Zhao Jiazhen, executive director and co-CEO of PDD. "That is why we have made the strategic decision to increase our ecosystem investments to help drive sales and reduce costs for a broader base of SME merchants."

At an earnings conference call last August, Chen said PDD's profit would gradually enter a downward trend, a necessary cost for long-term health. The firm's stock tumbled over 18 percent the next day.

Editor: Martin Kadiev