Latest news with #PDD
Yahoo
a day ago
- Business
- Yahoo
PDD Holdings Inc. (PDD): A Bull Case Theory
We came across a bullish thesis on PDD Holdings Inc. (PDD) on LongYield's Substack. In this article, we will summarize the bulls' thesis on PDD. PDD Holdings Inc. (PDD)'s share was trading at $97.88 as of 28th May. PDD's trailing and forward P/E were 10.53 and 7.76 respectively according to Yahoo Finance. Pixabay/Public domain PDD Holdings Inc., the parent company of Pinduoduo and Temu, delivered strong top-line growth in Q1 2025, with revenue rising 10% year-over-year to RMB 95.7 billion (US$13.184 billion), driven by robust performance in online marketing and transaction services. While near-term profitability declined—operating profit fell 38% and net income dropped 47%—these figures reflect PDD's deliberate and strategic reinvestment into its ecosystem. The company significantly ramped up spending in sales and marketing (+43%) and R&D (+23%) to strengthen its merchant base, upgrade supply chains, and support long-term competitiveness. This aggressive reinvestment positions PDD for sustained value creation, especially as consumer behavior increasingly favors affordable, high-quality offerings—PDD's core strength. With a powerful balance sheet, including RMB 364.5 billion (US$50.3 billion) in cash and short-term investments and no significant debt, the company is well-capitalized to weather macro uncertainties and accelerate its global expansion through Temu. The international platform continues to gain traction and, with careful navigation of geopolitical risks, could become a major growth engine. PDD's unique value-for-money positioning, group-buying model, and focus on underserved SMEs differentiate it from peers like Alibaba and Strategic initiatives such as a RMB 100 billion merchant support program, supply chain investments, and consumer incentives reinforce its ecosystem advantage. Though short-term margins are compressed, the long-term outlook remains compelling. With unmatched financial flexibility, rising global brand awareness, and a focus on sustainable growth, PDD is well-positioned to emerge as a dominant global e-commerce player over the next decade. Previously, we have covered PDD Holdings Inc. (PDD) in February 2025, wherein we summarized a bullish thesis by Favona Hathaway on Substack. The company was highlighted for its rapid growth, strong financials, and dominant position in value-for-money e-commerce through its C2M model and global expansion via Temu. The article noted PDD's impressive revenue and profit CAGR since 2021, minimal debt, and potential for a 144% market cap upside by 2029, despite geopolitical and macroeconomic risks. Since our last coverage, the stock is down 21% as of 28th May. PDD Holdings Inc. (PDD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held PDD at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of PDD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Down 17% in a week and on a P/E of 10! Should I buy this dirt cheap value stock?
Chinese stocks are normally valued at a discount to their US peers, even if they're in hyper-growth mode. Take PDD Holdings (NASDAQ: PDD), which is a Chinese e-commerce company that trades at the sort of valuation you'd expect to see from a FTSE 100 value stock. The Temu owner grew its revenue and earnings by 59% and 78%, respectively, last year. Yet the stock has tumbled 17% in a week and now trades at a price-to-sales (P/S) ratio of 2.6 and a price-to-earnings (P/E) multiple of just 10.5. At first glance, this looks unjustifiably cheap. So, should I add this value stock to my portfolio? Let's find out. Firstly, it's worth pointing out why US-listed Chinese stocks trade at such a wide discount to American peers. It all boils down to regulatory risk, as China's tech companies can quickly fall foul of regulators and have them breathing down their necks for all sorts of reasons. For example, as well as its international Temu shopping platform, PDD operates Pinduoduo in China. It focuses on value-for-money merchandise and has a strong emphasis on agricultural products, directly connecting farmers with consumers. It has had great success taking market share from larger e-commerce rivals like Alibaba in recent years. However, President Xi Jinping wants more 'high-quality development' in the Chinese economy, with fewer counterfeit goods. In response to these concerns, Pinduoduo has initiated efforts to enhance product quality. Last year, PDD said it was 'prepared to accept short-term sacrifices' to 'vigorously support high-quality merchants'. I read this as a clear signal that the firm's profits were going to come down significantly. To be fair, management was honest about this, saying: 'In the long run, the decline in our profitability is inevitable'. Essentially, Chinese companies have to align themselves with what the government wants. And this often doesn't involve the maximisation of shareholder profits, which puts off a lot of investors. Hence why most Chinese stocks trade at cheap multiples. And geopolitical risk associated with US-China tensions only adds to the downwards pressure. But it's not all domestic issues, including weak Chinese consumer spending, for PDD. Temu's explosive growth has relied on shipping low-cost goods to US consumers directly from Chinese merchants. However, President Trump has abolished the de minimis tax exemption that encouraged this, as well as slapping sky-high tariffs on Chinese imports. In Q1, PDD's revenue grew just 10% to $13.2bn, a significant deceleration. Meanwhile, profits fell nearly 50% to $2bn! The risk here is that Temu users face paying far higher costs, which could undermine the platform's raison d'être (dirt cheap bargains). Instead of being able to 'shop like a billionaire', as Temu puts it, consumers might have to settle for shopping like a humble millionaire. Or not at all on the app. Given the significant challenges the company faces, I don't think the earnings figures can be relied upon. In other words, the P/E ratio of 10 might be misleading if growth decelerates and margins take a hit. If a US-China trade deal is struck, perhaps PDD's strong international growth might resume. But given the murky outlook, I'm going to focus on other growth stocks for my portfolio. The post Down 17% in a week and on a P/E of 10! Should I buy this dirt cheap value stock? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
PDD Holdings Inc. (PDD): A Bull Case Theory
We came across a bullish thesis on PDD Holdings Inc. (PDD) on LongYield's Substack. In this article, we will summarize the bulls' thesis on PDD. PDD Holdings Inc. (PDD)'s share was trading at $97.88 as of 28th May. PDD's trailing and forward P/E were 10.53 and 7.76 respectively according to Yahoo Finance. Pixabay/Public domain PDD Holdings Inc., the parent company of Pinduoduo and Temu, delivered strong top-line growth in Q1 2025, with revenue rising 10% year-over-year to RMB 95.7 billion (US$13.184 billion), driven by robust performance in online marketing and transaction services. While near-term profitability declined—operating profit fell 38% and net income dropped 47%—these figures reflect PDD's deliberate and strategic reinvestment into its ecosystem. The company significantly ramped up spending in sales and marketing (+43%) and R&D (+23%) to strengthen its merchant base, upgrade supply chains, and support long-term competitiveness. This aggressive reinvestment positions PDD for sustained value creation, especially as consumer behavior increasingly favors affordable, high-quality offerings—PDD's core strength. With a powerful balance sheet, including RMB 364.5 billion (US$50.3 billion) in cash and short-term investments and no significant debt, the company is well-capitalized to weather macro uncertainties and accelerate its global expansion through Temu. The international platform continues to gain traction and, with careful navigation of geopolitical risks, could become a major growth engine. PDD's unique value-for-money positioning, group-buying model, and focus on underserved SMEs differentiate it from peers like Alibaba and Strategic initiatives such as a RMB 100 billion merchant support program, supply chain investments, and consumer incentives reinforce its ecosystem advantage. Though short-term margins are compressed, the long-term outlook remains compelling. With unmatched financial flexibility, rising global brand awareness, and a focus on sustainable growth, PDD is well-positioned to emerge as a dominant global e-commerce player over the next decade. Previously, we have covered PDD Holdings Inc. (PDD) in February 2025, wherein we summarized a bullish thesis by Favona Hathaway on Substack. The company was highlighted for its rapid growth, strong financials, and dominant position in value-for-money e-commerce through its C2M model and global expansion via Temu. The article noted PDD's impressive revenue and profit CAGR since 2021, minimal debt, and potential for a 144% market cap upside by 2029, despite geopolitical and macroeconomic risks. Since our last coverage, the stock is down 21% as of 28th May. PDD Holdings Inc. (PDD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held PDD at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of PDD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
BofA Cuts PDD Holdings (PDD) Target to $120, Maintains Hold
On May 28, PDD Holdings (NASDAQ:PDD) reported weaker quarterly results, prompting Bank of America Securities analyst Joyce Ju to lower her price target to $120 from $140 and reiterate a "Hold" rating on the shares. Ju was disappointed with a slowdown in transaction revenue growth in Q1 2025, as well as a decline in adjusted net profits. The company stated that it had made substantial investments in its platform ecosystem, which negatively impacted its short-term profitability. A close-up of a customer using the company's e-commerce platform whilst shopping online. The company's adjusted operating profit decreased by 36% year-over-year, while its net profit declined by 45%. The contributing reasons for this weaker performance included a cut in merchant fees, lower benefits from trade-in subsidies, and the impact of trade policies on the U.S., its largest market. The analyst noted that the earnings from the domestic marketplace declined despite solid growth. Adding to its challenges, the Temu online marketplace business also continued to report losses. Ju believes the situation should improve in the coming quarters as some of these trends begin to reverse. However, she expects earnings for the next few years to remain pressured by the recent investments and changes to its various programs. As a result, she maintained his cautious stance. PDD Holdings is a multinational commerce group that owns and operates a portfolio of digital marketplaces businesses, including Pinduoduo and Temu. While we acknowledge the potential of PDD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PDD and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
3 days ago
- Business
- Wall Street Journal
Podcast: Stocks Rise After Trump Agrees to Delay EU Tariffs
The Dow Jones Industrial Average adds 1.8%, while the S&P 500 gains 2.1% and the Nasdaq surges 2.5%. Plus: Tesla stock rises after Chief Executive Elon Musk says in a social-media post that he is "back to spending 24/7 at work." Profit slides at Temu's Chinese owner, PDD. Trump Media plans to raise $2.5 billion from investors to buy bitcoin. 🎧 Listen: Ariana Aspuru hosts the Minute Briefing podcast.
