Morgan Stanley calculates Temu's global expansion potential: GMV to reach $130 billion by 2030, with Europe and Latin America as the main focus

"The shining star" PDD's overseas expansion is a focus of wide attention in the industry. PDD's international business Temu, launched in September 2022, has rapidly risen in the global market with its low-price strategy and rich product selection. Analysts from Morgan Stanley, including Eddy Wang, pointed out in their latest research report that Temu's global expansion strategy is at a critical stage, with remarkable market potential and profit prospects. The platform is expected to achieve profitability as early as 2025, with huge GMV growth potential, reaching $130 billion by 2030. Going beyond the U.S., global layout becomes more balanced Temu is gradually adjusting its globalization strategy from initially focusing on the U.S. market to a more balanced global layout. In 2023, Temu went through an aggressive user acquisition phase in the U.S. Moving into 2024, the company's strategic focus in the U.S. shifted towards enhancing the richness of product categories (SKUs) and improving user experience, while actively expanding into emerging markets such as Europe and Latin America. Analysts noted that in May 2024, Temu's monthly active users (MAU) in Europe have surpassed Amazon and AliExpress by 38% and 82% respectively. This strong growth momentum is expected to continue into the second half of 2024, bringing a more balanced global market layout for Temu. Huge GMV growth potential, could reach $130 billion by 2030 With the adjustment of its globalization strategy, Temu's GMV (Gross Merchandise Volume) regional distribution is undergoing significant changes. Analysts pointed out that the contribution of the U.S. market to Temu's GMV is expected to decrease from over 50% in 2023 to 33% in 2024, further dropping to 30% by 2030. Meanwhile, the European market is expected to become Temu's largest GMV source in 2024, accounting for 37%. The Latin American market is also projected to contribute around 10% of the GMV in 2024. Based on this trend, analysts predict that Temu's GMV will increase from $19 billion in 2023 to $53 billion in 2024, and believe that Temu's GMV could reach $130 billion by 2030. Despite rapid growth, Temu's market share in e-commerce in various regions remains relatively small, with an estimated share of less than 2% in the U.S. market in 2024, and less than 4% in Europe and Latin America, indicating significant growth potential. Profit prospects and operational model optimization to achieve profitability by 2025 With the promotion of the semi-managed model and the improvement in operational efficiency, Temu's profitability is expected to significantly improve. Analysts predict that Temu may achieve profitability by 2025, with its operating profit expected to reach $9 billion by 2030. The improvement in profit prospects is mainly attributed to the following factors: The promotion of the semi-managed model helps to expand the serviceable market size and improve gross profit margin; Optimization of warehousing and logistics management improves user experience while reducing operating costs; A more balanced global layout, diversifying market risks and enhancing overall operational efficiency.