Chinese commerce group PDD Holdings, formerly Pinduoduo, is listed on the NASDAQ under the ticker symbol PDD and operates one of the largest online marketplaces in China.
Founded in 2015 by Colin Huang, Pinduoduo changed its name to PDD Holdings in 2023. It is the parent company of Pinduoduo and Temu.
PDD Shares Today (PDD)
Pinduoduo uses the social commerce model by allowing users to participate in group buying, offering discounts when consumers purchase in bulk through a social sharing mechanism. The innovative business model helped Pinduoduo become a leading e-commerce platform in China, known for offering home products, daily essentials, and daily groceries.
The company is also increasing its international presence with the launch of Temu, an online marketplace aimed at global consumers.
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E-Commerce Comparison
Pinduoduo Holdings EPS and Revenue Breakdown 2020-2023
| Year | EPS | Annual Revenue |
|---|---|---|
| 2020 | -$0.87 | $8.8 billion |
| 2021 | $0.98 | $14.54 billion |
| 2022 | $3.63 | $19.20 billion |
| 2023 | $4.47 | $34.87 billion |
PDD Holdings Price
PDD shares have been volatile since the company's IPO in 2018. After peaking at over $200 per share in early 2021, the stock experienced a significant decline. However, between 2022 and early 2024, it had made solid gains. While it had struggled for upside in 2024, the recent economic stimulus announced in China has seen the stock jump, rising over 57% in the last month. As of October 4, 2024, it is up over 7% this year.
P/E Ratio Average Over the Last Five Years: 26.59
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PDD Stock Price Forecast
According to analyst data compiled by TradingView, out of 47 analysts covering PDD, 44 have a Buy rating on the stock, while three have issued the Pinduoduo parent company with a Hold rating.
A View From The Bulls: PDD's stock declined in August after its earnings release disappointed investors, with the company stating there are “many challenges ahead.” However, Benchmark analyst Fawne Jiang told investors in a note that the market was “overreacting.” While Jiang lowered the firm's price target on PDD to $185 from $230, Benchmark kept a Buy rating on the stock. They noted that revenue fell short of consensus, but profitability exceeded expectations. Jiang pointed out that the company guided for slower growth due to ongoing international uncertainties. However, Benchmark believes PDD's fundamentals are “not broken,” and it the market is “overreacting.”
A View From The Bears: Taking a more bearish tone, in late August, Citi downgraded PDD to Neutral from Buy with a new price target of $120, down from $194. While Citi acknowledged that PDD's Q2 revenue miss may not be “thesis changing,” they said the firm is “struggling to reconcile” whether management's cautious outlook due to intensified competition, shift of consumption patterns, and uncertain external environment reflects “actual challenges” from a declining return on its “value-for-money” moat or trying to manage investor expectations via a “low profile” approach. Citi added that it believes the stock will likely be range-bound until PDD is able to regain investor confidence.
Average Analyst Consensus 12-Month Price Target: $166.55
Our View: PDD Holdings offers an attractive growth story in the Chinese and global e-commerce space, particularly due to its unique approach to social commerce.
The company's ability to leverage group buying, integrate social interactions, and expand into international markets sets it apart from competitors. Temu’s success internationally adds another layer of growth potential. However, the company's Q2 earnings report and warning of challenges ahead mean investors should be cautious and may want to wait for a more attractive entry point if they are bullish on the stock.
Who Should Buy PDD Holdings Shares?
PDD Holdings is a stock that investors bullish on the e-commerce sector may find attractive, particularly in China and emerging markets. The company's innovative business model, strong user base, and continued international expansion make it a promising candidate for those seeking exposure to the online retail sector.
Long-term investors who are comfortable with regulatory and market risks may find PDD’s long-term growth potential appealing. The company’s ability to disrupt the traditional e-commerce model with its social commerce platform offers unique growth prospects, especially as it expands its product offerings and explores new markets through Temu.
However, investors with a lower risk tolerance or those wary of investing in Chinese tech companies amid regulatory scrutiny may want to proceed with caution. The high level of competition in the e-commerce industry and potential headwinds related to regulation in China could impact PDD’s growth trajectory.
In addition, investors seeking stocks that provide a regular income will want to look elsewhere, as PDD Holdings does not pay dividends.
