PDD Holdings (NASDAQ:PDD) stock is slipping on Tuesday after Morgan Stanley’s analysts provided a sour look at the company’s Temu e-commerce app.

This new coverage comes from Morgan Stanley analysts Simeon Gutman and Brian Nowak in a note to clients. The two believe that the massive growth that Temu saw in 2023 is cresting and that sales on the platform are steadily slowing.

All of this comes after PDD launched an aggressive ad campaign last year to promote the e-commerce service in the U.S. That included a Super Bowl ad and ads on social media. This prompted rapid adoption of the app during that time.

Here’s what the two analysts said about PDD in a note to clients obtained by Investor’s Business Daily:

“Per our latest data, the number of households shopping on Temu continues to fall (now about 20% lower than September 2023) with future purchase intentions also lower than most other discounters/e-tailers in our survey. Despite Temu buying millions of monthly app downloads, U.S. web traffic and app usage data also shows stalling/moderating uptake since October, even through the holiday period. App download velocity also now seems to be stalling.”

What This Means for PDD Stock

This warning may rattle investors in PDD stock and see them sell the company’s shares. That’s likely why PDD shares are down 2% as of Tuesday morning.

While today’s news appears negative, investors will note that analysts are still positive on PDD right now. The consensus rating and price target for the company is a buy based on 10 opinions and $128.40 per share.

As for today’s trading activity, about 2.6 million shares of PDD stock have changed hands. To put that number in perspective, PDD’s daily trading volume is around 7.9 million shares.

Investors who are on the lookout for even more of the most recent stock market stories today are in luck!

We offer up all of the hottest stock market news that traders need to know about on Tuesday! That includes everything happening with shares of Spotify (NYSE:SPOT) stock, Super Micro Computer  (NASDAQ:SMCI) stock and 60 Degrees (NASDAQ:SXTP) stock today. You can read up on all of these matters by checking out the following links!

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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.