PDD Holdings (PDD) AI Stock Analysis

Compare

7,440 Followers

PDD Dividends

Top Page

PDD Holdings

(NASDAQ:PDD)

78Outperform

PDD Holdings demonstrates a strong financial performance with robust growth in revenue and profitability, supported by a solid balance sheet. Despite high investing cash outflows, the company's financial health remains intact. Technical analysis indicates a neutral trend, while valuation suggests the stock is fairly priced. The recent earnings call revealed strong growth and strategic initiatives, though rising costs and competition present challenges. Overall, PDD is well-positioned for continued stability and growth in the competitive Specialty Retail industry.

Positive Factors

Earnings

Earnings beat; better consumption sentiment could propel valuation rerating.

Financial Performance

Non-GAAP net profit grew 17% year-over-year, 4% higher than consensus, due to high marketing spend efficiency and narrowed TEMU loss.

Market Valuation

The stock trading at a forward P/E of 10x is believed to have an attractive risk/reward profile.

Negative Factors

Gross Margin

Gross margin declined to 56.8%, which was below the consensus of 59.8%.

Regulatory Environment

Management acknowledges the accelerated headwind in the external regulatory environment with intense competition.

Revenue Growth

Revenue growth was slower than expected, with total revenues increasing by 24% year-over-year, which was 5% below consensus.

PDD Holdings (PDD) vs. S&P 500 (SPY)

Market Cap

$154.97B

Dividend YieldN/A

Average Volume (3M)11.69M

Price to Earnings (P/E)10.5

Beta (1Y)0.98

Revenue Growth57.51%

EPS Growth82.28%

CountryUS

Employees23,465

SectorConsumer Cyclical

Sector Strength58

IndustrySpecialty Retail

Share Statistics

EPS (TTM)2.77

Shares Outstanding1,419,646,500

10 Day Avg. Volume7,154,697

30 Day Avg. Volume11,693,780

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$141.53

Price Target Upside28.78% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

PDD Holdings Business Overview & Revenue Model

Company DescriptionPDD Holdings Inc., a multinational commerce group, owns and operates a portfolio of businesses. It operates Pinduoduo, an e-commerce platform that offers products in various categories, including agricultural produce, apparel, shoes, bags, mother and childcare products, food and beverage, electronic appliances, furniture and household goods, cosmetics and other personal care, sports and fitness items and auto accessories; and Temu, an online marketplace. It focuses on bringing businesses and people into the digital economy. The company was formerly known as Pinduoduo Inc. and changed its name to PDD Holdings Inc. in February 2023. The company was incorporated in 2015 and is based in Dublin, Ireland.

How the Company Makes MoneyPDD Holdings generates revenue primarily through online marketplace services, where it charges merchants commission fees on transactions. The company also earns from advertising services, as merchants can pay for increased visibility and targeted marketing on the platform. Additionally, PDD Holdings benefits from its C2M strategy, which reduces supply chain costs and enhances pricing competitiveness. Partnerships with manufacturers and suppliers are crucial, enabling PDD to offer attractive deals and maintain a vast product selection. The platform's high user engagement and innovative shopping incentives drive repeat purchases, further bolstering its revenue streams.

PDD Holdings Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Analyzes revenue from different business segments, highlighting which areas are driving growth and which may need strategic adjustments.

Chart InsightsPDD Holdings' revenue from Transaction Services has surged, surpassing Online Marketplace Services and Other, reflecting a strategic pivot towards enhancing transaction efficiency and merchant support. The earnings call highlights a 24% year-over-year revenue increase in Q4 2024, driven by a 10 billion fee reduction program and logistics support, benefiting merchants and expanding consumer reach. Despite rising costs and competitive pressures, the company remains focused on high-quality development and global expansion, underscoring its commitment to long-term growth and resilience in a challenging market environment.

Data provided by:

Main Street Data

PDD Holdings Financial Statement Overview

Summary

PDD Holdings exhibits strong financial health with robust revenue growth and profitability improvements. The balance sheet is solid with low leverage and high liquidity, although investing cash outflows are notable.

Income Statement

Very Positive

PDD Holdings has demonstrated strong revenue growth with a compound annual growth rate over the past few years. Gross and net profit margins have improved significantly, indicating enhanced operational efficiency and profitability. The EBIT and EBITDA margins have also shown positive trends, showcasing effective cost management and profitability scaling.

Balance Sheet

Positive

The balance sheet reflects a strong equity position with a low debt-to-equity ratio, suggesting prudent financial leverage. Return on Equity (ROE) has been robust, driven by increasing net income. The equity ratio indicates a stable capital structure with significant equity cushioning against liabilities.

Cash Flow

Positive

Cash flow analysis reveals substantial operating cash flow generation, supporting free cash flow growth. The company effectively converts its net income into cash, enhancing financial flexibility. However, high investing cash outflows may indicate significant capital expenditure or investments, which should be monitored for their impact on cash reserves.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
393.84B	247.64B	130.56B	93.95B	59.49B
	Gross Profit
239.94B	155.92B	99.10B	62.23B	40.21B
	EBIT
108.42B	58.70B	30.40B	6.90B	-9.38B
	EBITDA
109.21B	59.48B	39.21B	12.53B	-8.73B
	Net Income Common Stockholders
112.43B	60.03B	31.54B	7.77B	-7.33B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
331.56B	217.21B	149.44B	92.94B	86.97B
	Total Assets
505.03B	348.08B	237.12B	181.21B	158.91B
	Total Debt
10.61B	10.17B	16.93B	12.76B	16.97B
	Net Debt
-47.16B	-49.63B	-17.39B	6.33B	-5.45B
	Total Liabilities
191.72B	160.84B	119.35B	106.10B	98.73B
	Stockholders Equity
313.31B	187.24B	117.77B	75.11B	60.18B
Cash Flow		Free Cash Flow
121.93B	93.58B	6.40B	25.50B	28.15B
	Operating Cash Flow
121.93B	94.16B	7.03B	28.78B	28.20B
	Investing Cash Flow
-118.36B	-55.43B	-3.24B	-35.56B	-38.36B
	Financing Cash Flow
1.16M	-8.96B	1.46M	-1.88B	51.80B

PDD Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price109.90

Price Trends

50DMA

111.24

Negative

100DMA

109.57

Positive

200DMA

114.66

Negative

Market Momentum

MACD

0.43

Negative

RSI

56.25

Neutral

STOCH

78.79

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PDD, the sentiment is Neutral. The current price of 109.9 is above the 20-day moving average (MA) of 101.27, below the 50-day MA of 111.24, and below the 200-day MA of 114.66, indicating a neutral trend. The MACD of 0.43 indicates Negative momentum. The RSI at 56.25 is Neutral, neither overbought nor oversold. The STOCH value of 78.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PDD.

PDD Holdings Risk Analysis

PDD Holdings disclosed 86 risk factors in its most recent earnings report. PDD Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

PDD Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BABA	81 Outperform	$304.76B	17.80	11.97%	0.80%	4.28%	28.42%
PDD	78 Outperform	$154.97B	10.54	45.06%	―	57.51%	82.28%
MELI	77 Outperform	$113.00B	59.13	49.11%	―	41.92%	81.11%
SE	76 Outperform	$83.52B	190.97	5.93%	―	28.46%	185.04%
JD	72 Outperform	$48.64B	9.12	17.55%	2.90%	5.20%	77.60%
CPNG	68 Neutral	$43.75B	289.38	6.06%	―	20.88%	-80.08%
Sector *	61 Neutral	$6.59B	11.77	3.06%	3.98%	2.56%	-20.85%

* Consumer Cyclical Sector Average

Performance Comparison

PDD

PDD Holdings

109.90

-26.37

-19.35%

MELI

Mercadolibre

2,410.00

716.03

42.27%

34.12

1.92

5.96%

BABA

Alibaba

125.79

47.43

60.53%

Sea

145.82

80.91

124.65%

CPNG

Coupang

25.63

3.13

13.91%

PDD Holdings Earnings Call Summary

Earnings Call Date:Mar 20, 2025

(Q4-2024)

% Change Since: -12.72%|

Next Earnings Date:May 23, 2025

Earnings Call Sentiment Neutral

PDD Holdings demonstrated strong revenue growth and successful merchant support initiatives, despite facing challenges such as rising costs, intense competition, and fluctuating profit margins. The company's commitment to agriculture and global business strategy show a focus on long-term development.

Q4-2024 Updates

Positive Updates

Strong Revenue Growth

Q4 revenue reached RMB 110.6 billion, up 24% year-on-year, and full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year.

Successful Merchant Support Initiatives

The 10 billion fee reduction program enabled over 10 million merchants to enhance operational efficiency and reduce cost. Logistic support measures drove double-digit order growth and extended free shipping to nearly 100 million consumers in remote regions.

Commitment to Agriculture

Sustained investments in agriculture technology and supply chain innovation led to significant breakthroughs in yield, efficiency, and energy consumption.

Global Business Strategy

Continued focus on supplying high-quality products to global consumers while maintaining high compliance standards and exploring new business models.

Negative Updates

Rising Costs and Expenses

Total cost of revenues increased 36% year-on-year for Q4 and 68% for the full year 2024 due to increased fulfillment fees and payment processing fees.

Competition and Market Challenges

Intense competition and changes in macro conditions and policies pose challenges, especially in the domestic e-commerce and global markets.

Fluctuating Profit Margins

Non-GAAP operating profit margin decreased from 28% in Q4 2023 to 24% in Q4 2024, despite an increase in non-GAAP operating profit.

Company Guidance

During the fourth quarter and fiscal year 2024 earnings call for PDD Holdings Inc., the company reported significant financial and strategic metrics. The Q4 revenue reached RMB 110.6 billion, marking a 24% year-over-year increase, while the full-year 2024 revenue was RMB 393.8 billion, reflecting a 59% growth from the previous year. The company's revenue growth showed moderation, attributed to substantial ecosystem investments amid a competitive landscape. Notably, the firm executed a 10 billion fee reduction program, which benefited over 10 million merchants, and logistics support measures that extended free shipping to nearly 100 million consumers in remote regions. The Merchant Rights Protection Committee was established to enhance communication and dispute resolutions. Operating profit for Q4 on a GAAP basis was RMB 25.6 billion, with a non-GAAP operating profit margin of 24%. The company held RMB 331.6 billion in cash, cash equivalents, and short-term investments as of December 31, 2024. Looking forward, the company emphasized its commitment to high-quality development in 2025, aiming to enhance merchant support and broaden quality supply on the platform.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.