'Temu Threat Abating in 2Q24' - Barclays

According to the latest Barclaycard data reviewed by Barclays analysts, Temu's presence in the US market has shown signs of weakening in the second quarter of 2024.

"Our quarterly refresh of Barclaycard data on thousands of Temu spenders points to new buyer activations back at 1Q23 levels, well off the 3Q23 peak," wrote the bank.

Barclays suggests that Temu's focus may be shifting from aggressive new user acquisition in the US to improving retention and expanding in other regions.

The key takeaway from the Barclays note is that "the cadence of new US Temu users has nearly halved over the last three quarters and is now back at 1Q23 levels."

The bank believes the shift suggests a strategic de-emphasis on the US market for Temu as it prioritizes growth in other geographic areas. The trend is coupled with deteriorating retention rates, with Barclays revealing that only 34% of the 1Q24 cohort made repeat purchases in Q2, compared to over 46% for the 1Q23 cohort.

Barclays also points to potential external factors impacting Temu's performance. A recent Biden Administration announcement indicates a potential reduction in the de minimis exemption for cross-border trade, which could affect foreign marketplaces operating in the US.

Despite these challenges, Barclays notes that "Temu likely only represents ~$3B in global ad revenue in 2024," implying that the impact on META's ad revenues could be mitigated by other marketers filling the gap.

Moreover, they state that the expected tightening of regulations might benefit domestic marketplaces like eBay (NASDAQ:EBAY ) and Etsy (NASDAQ:ETSY ).

Barclays also says EBAY could gain from the reduced presence of Chinese sellers, while the impact on ETSY and AMZN would be comparatively modest.

Source: Investing.com