Shein Takes Legal Action Against Temu: Design Theft and Fraud Allegations Fly

Chinese bargain retailer Shein filed a lawsuit against rival PDD Holdings Inc PDD Temu on Monday for allegedly stealing its designs and being involved in counterfeiting, intellectual property infringement, and fraud. 

Shein is battling similar allegations from various brands and independent artists, including Levi Strauss and H&M. 

“Temu draws U.S. consumers into downloading and using its mobile application with promises of extremely low pricing. But Temu is not profiting from the sale of these products, which are priced so low that Temu must subsidize each sale, losing money on every transaction,” CNBC cites from Shein’s complaint against Temu. 

Chinese discount retailers are also grappling with a weak economy. Alibaba Group Holding Limited BABA, considered a benchmark for China’s economy, posted a fiscal first-quarter 2024 profit decline of 29% year-on-year.

In 2023, Temu filed a lawsuit against Shein over copyright concerns.

Recent reports indicated Amazon was launching a new bargain section on its shopping site, targeting overseas consumers with items from China. This would mark a setback for Chinese discount retailers like Shein, Temu, and Alibaba Group Holding Limited BABA.

PDD Stock Prediction 2024

Equity research can be a valuable source of information for learning about a company's fundamentals. Analysts create financial models based on the fundamentals and expected future earnings of a company to arrive at a price target and recommendation for the stock.

Shares of PDD Holdings have an average 1-year price target of $212.83, representing an expected upside of 44.82%.

Because of differences in assumptions, analysts can arrive at very different price targets and recommendations. No analysts have bearish recommendations on PDD Holdings, while 6 analysts have bullish ratings. The street high price target from Bernstein is $235.0, while the street low from Goldman Sachs is $184.0.

Price Action: PDD stock traded higher by 2.21% at $147.41 at the last check on Wednesday.

Photo via Shutterstock