PDD Holdings (PDD)  had been one of the better-performing stocks in recent years but has now dropped 30% since reporting Q2 results on Monday. The sharp selloff comes as the multinational e-commerce firm reiterated that a decline in its profitability is inevitable and expects the trend to start during Q3.Stiffer competition and broader economic concerns in China are anticipated despite PDD’s discounted merchandise allowing the company to take market share from other e-commerce titans such as Alibaba (BABA) ...

Robert Way Article Thesis PDD Holdings Inc. (NASDAQ:PDD) reported stronger-than-expected profits for the most recent quarter, but revenues missed estimates and management's comments suggest that growth will slow down going forward. This has resulted in a hefty share price reaction, which might be an overreaction, as PDD wasn't expensive even before this share price pullback. Past Coverage I have covered PDD Holdings Inc. here on Seeking Alpha, in an article from earlier this year. I gave the company a " ...

The company suffers the aftermath of a disappointing quarter.Even though PDD Holdings (PDD -4.09%) had little proprietary news to report on Tuesday, its stock was affected by the latest analyst moves. Several pundits tracking the Chinese e-commerce incumbent cut their price targets a day after its latest earnings release -- with one even downgrading her recommendation -- leading to a sell-off by Mr. Market.PDD's American depositary receipts (ADRs) ended the day more than 4% lower in price, contrasting unfav ...

NEW YORK, Aug. 27, 2024 (GLOBE NEWSWIRE) -- The Gross Law Firm issues the following notice to shareholders of PDD Holdings Inc. f/k/a Pinduoduo Inc. (NASDAQ: PDD). Shareholders who purchased shares of PDD during the class period listed are encouraged to contact the firm regarding possible lead plaintiff appointment. Appointment as lead plaintiff is not required to partake in any recovery. CONTACT US HERE: https://securitiesclasslaw.com/securities/pdd-holdings-inc-f-k-a-pinduoduo-inc-loss-submission-form/?id ...

Yoshiyoshi Hirokawa/DigitalVision via Getty Images Introduction PDD Holdings' (NASDAQ:PDD) negative comments about its long-term profitability forecast, the unpredictability of geopolitical conflict, and the absence of a shareholder buyout surprised the market when the company released its Q2 earnings today. As a result, after the earnings, the stock price fell by 30%. We published an article titled "PDD Holdings Challenge To Alibaba's Reign" in November 2023. We think the moment is probably near after exam ...

Key TakeawaysU.S.-traded shares of Temu parent PDD Holdings plunged 29% on Monday after the China-based online retailer posted revenue that came in below expectations amid intensifying competition.Investors fret that profitability may slow as the company increases investments to scale its business.PDD shares broke down from a rising wedge on above-average trading volume, indicating selling participation by institutional investors.Investors may look for buying opportunities at key support levels including $9 ...

Earnings Performance and Market Reaction - PDD Holdings' stock declined nearly 30% on August 26 after its Q2 earnings release, retesting lows last seen in October 2023 [1] - Despite a 86% YoY revenue surge, the company failed to outperform Wall Street's revenue estimates, indicating high market optimism [1] - Transaction services revenue increased by 234% YoY, while online marketing services grew only 29% YoY [1] Competitive Landscape and Strategic Shifts - PDD plans to invest more aggressively from Q3 to address heightened competition, which may worsen profitability metrics in the near term [2] - The company faces challenges from Amazon's encroachment and regulatory scrutiny over merchant practices, including non-compliant merchants [2] - PDD needs to undertake a structural shift in its merchant ecosystem to adapt to changing consumer preferences and competitive pressures [2] Valuation and Market Sentiment - PDD's valuation grade improved from "D" to "B-" over the past six months, reflecting significant pessimism after the selloff [4] - The company's adjusted forward PEG ratio of 0.32 is nearly 80% below the sector median, highlighting its growth-adjusted valuation appeal [4] - Despite the selloff, PDD remains priced for growth, suggesting a valuation bifurcation [4] Investment Strategy and Future Outlook - PDD's decision to reduce transaction fees and invest in higher-quality merchants is deemed appropriate but may impact revenue and profitability in the near term [3] - The company's uptrend continuation thesis has weakened but not decisively overturned, with potential for dip-buyers to return after the selling intensity subsides [5] - Management's focus on regulatory compliance and high-quality merchant growth is expected to mitigate long-term risks [5]

Warren Buffett and value investors like him like to start looking into stocks when they are beaten up the most. Value investing is often a contrarian view; otherwise, the market would be efficiently priced, as some academics would argue. Being willing to go against popular opinion and consensus can deliver the greatest dividends, and there is one stock offering such an opportunity today.PDD TodayPDDPDD$100.00 -39.87 (-28.51%) 52-Week Range$79.00▼$164.69P/E Ratio13.25Price Target$187.50Add to WatchlistOperat ...

The impact of missed earnings expectations can be severe, as Temu’s parent company, PDD Holdings (NASDAQ: PDD), came to know, experiencing its largest ever one-day drop since its listing on Nasdaq.Namely, on August 26, PDD Holdings released its Q2 earnings report, which posted a miss on expectations with a miss on adjusted earnings-per-share (EPS) of $0.81, compared to expectations of $2.81.Revenue also came in below expectations at $13.35 billion compared to an estimated $13.78 billion, prompting a massive ...

Investment Rating - Maintain "Outperform" rating [2][18][22][33] Core Views - The company's non-GAAP net profit for the quarter reached 34.3 billion yuan, a year-on-year increase of 125%, with a non-GAAP net profit margin of 35%, up 6 percentage points year-on-year [2][5] - The significant improvement in net profit margin is primarily due to the substantial reduction in losses from TEMU [2][5] - The company's gross profit margin for the quarter was 65%, up 1 percentage point year-on-year [2][5] - Sales expenses increased by 48% year-on-year, but the sales expense ratio decreased by 7 percentage points to 27% [2][5] - Management indicated that the company will not engage in share buybacks or dividends in the near future due to intense competition and external uncertainties [2][5] Revenue and Profit Forecasts - Revenue is expected to grow from 419.3 billion yuan in 2024E to 592.2 billion yuan in 2026E, with growth rates of 69.3%, 22.0%, and 15.8% respectively [1] - Adjusted net profit is projected to increase from 121.3 billion yuan in 2024E to 163.1 billion yuan in 2026E, with growth rates of 78.7%, 17.2%, and 14.7% respectively [1] - Adjusted EPS is forecasted to rise from 22.15 yuan in 2024E to 29.78 yuan in 2026E [1] Financial Metrics - EBIT margin is expected to decline from 32.7% in 2024E to 28.0% in 2025E and 2026E [1] - ROE is projected to peak at 39.7% in 2024E before declining to 25.9% in 2026E [1] - The PE ratio is expected to decrease from 8.0x in 2024E to 6.0x in 2026E [1] - EV/EBITDA is forecasted to increase from 2.9x in 2024E to 3.9x in 2026E [1] Business Performance - Quarterly revenue reached 97.0 billion yuan, up 85% year-on-year, driven by a 234% increase in payment channel revenue, largely due to TEMU's rapid growth [17][20] - Advertising revenue grew by 29% year-on-year, reflecting the company's enhanced monetization capabilities [17][20] - TEMU's Q2 GMV exceeded 13.0 billion USD, contributing approximately 47.1 billion yuan in revenue [17][20] Strategic Focus - The company plans to reduce transaction fees for high-quality merchants by 10.0 billion yuan in the first year [17][20] - Investments will be made to streamline merchant onboarding and product listing processes, improving platform quality and merchant environment [17][20] - The company is shifting its strategy towards long-term investments, which may pressure profitability in the future [33]