Shares in PDD Holdings, Temu’s parent company, fell nearly 30% on Monday after the Chinese e-commerce giant warned that its sales were likely to decline amid increasing competition in the fast-fashion sector.

PDD co-founder Lei stressed that the company’s current growth is not sustainable as it struggles to attract price-conscious shoppers with competitors such as Shein, ByteDance’s TikTok and Alibaba.

“Competition is here to stay and is expected to intensify in our industry,” Chen told analysts at a press conference after the results were announced, according to Bloomberg.

“High sales 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 spent billions to expand its Temu business in the US, where it is in direct competition with fast-fashion giant Shein.

Both companies faced lawsuits and allegations of copyright infringement and unethical labor practices.

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

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

Chen, who lost $14 billion in book value in Monday’s share price crash, said PDD needs to invest more in its dealers as competitors try to steal suppliers from each other.

Colin Huang, CEO of PDD Holdings, was the richest person in China last week with a net worth of $49.3 billion – but that figure dropped to $35.2 billion on Monday, according to Forbes.

PDD has enjoyed success with its Temu business in recent years as consumers, battered by stubborn inflation, have turned to traditional retail and cheaper fast-fashion items online.

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