Shares of PDD Holdings (PDD) plunged in pre-market trading after the company reported disappointing results. The Chinese online retailer’s Q3 adjusted earnings increased by 60% to RMB18.59 ($2.65) per American Depository Share (ADS). This fell short of consensus estimates of $2.70 per share.
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Furthermore, the company’s Q3 revenues soared by 44% year-over-year to RMB99.4 billion ($14.16 billion) in the third quarter. However, this was below Street estimates of $14.2 billion.
China’s Consumer Slowdown Impacts PDD’s Q3 Results
The company’s disappointing Q3 results indicate that the consumer slowdown in China continues to weigh on performance, despite the success of its popular shopping app Temu in international markets. In fact, PDD issued a stark warning about the slowing pace of China’s economy in the last quarter, pointing out uncertainties in both local and global markets.
While these challenges persist at home, PDD is rapidly expanding in international markets. The company has invested heavily in Temu, its fast-growing shopping app, to solidify its global footprint. Since its high-profile debut in 2022 in the U.S., Temu has become one of the most downloaded apps in the U.S.
Is PDD a Good Buy Now?
Analysts remain bullish about PDD stock, with a Strong Buy consensus rating based on 12 Buys and two Holds. Year-to-date, PDD has declined by more than 15%, and the average PDD price target of $168.99 implies an upside potential of 45.1% from current levels. These analyst ratings are likely to change following PDD’s results today.
