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PDD Holdings (PDD)
NASDAQ:PDD
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PDD Holdings
(NASDAQ:PDD)
78Outperform
Positive Factors
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 Positioning
The sales and marketing expense ratio of 28.3% is better than consensus at 31.7%, which indicates better-than-feared market positioning of PDD.
Valuation
The stock trading at a forward P/E of 10x is believed to have an attractive risk/reward profile.
Negative Factors
Operational Challenges
Profit pressure has yet to be normalized despite strong operating leverage.
Regulatory Environment
Management acknowledges the accelerated headwind in the external regulatory environment with intense competition.
Revenue Performance
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
$157.86B
Dividend YieldN/A
Average Volume (3M)9.59M
Price to Earnings (P/E)9.9
Beta (1Y)1.17
Revenue Growth57.51%
EPS Growth82.28%
CountryUS
Employees17,403
SectorConsumer Cyclical
Sector Strength61
IndustrySpecialty Retail
Share Statistics
EPS (TTM)10.56
Shares Outstanding1,388,770,600
10 Day Avg. Volume8,359,478
30 Day Avg. Volume9,588,503
Financial Highlights & Ratios
PEG Ratio0.12
Price to Book (P/B)N/A
Price to Sales (P/S)5.11
Price to Cash Flow (P/CF)N/A
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
$143.17Price Target Upside37.39% 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 makes money primarily through its e-commerce platform, Pinduoduo, by facilitating transactions between buyers and sellers. The company generates revenue from various streams including commissions on sales, advertising services, and transaction fees. Pinduoduo charges sellers a commission on each sale made through its platform, which is a significant source of income. Additionally, the platform offers paid advertising services that allow sellers to increase their visibility and reach more potential buyers, thus generating additional revenue. Pinduoduo's innovative approach to group buying not only increases sales volume but also attracts more sellers to its platform, thereby enhancing its revenue potential. The company's earnings are further supported by strategic partnerships with various suppliers and logistics providers, which enhance its supply chain efficiency and competitive pricing strategy.
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
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.85
Very Positive
Balance Sheet
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.80
Positive
Cash Flow
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.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Negative
104.21
Price Trends
118.89
Negative
110.96
Negative
118.86
Negative
Market Momentum
1.27
Positive
51.06
Neutral
17.75
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PDD, the sentiment is Negative. The current price of 104.21 is below the 20-day moving average (MA) of 121.50, below the 50-day MA of 118.89, and below the 200-day MA of 118.86, indicating a bearish trend. The MACD of 1.27 indicates Positive momentum. The RSI at 51.06 is Neutral, neither overbought nor oversold. The STOCH value of 17.75 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $303.69B | 16.39 | 11.97% | 0.84% | 4.28% | 28.42% | |
78 Outperform | $157.86B | 9.87 | 45.06% | ― | 57.51% | 82.28% | |
78 Outperform | $62.78B | 9.85 | 17.55% | 2.01% | 5.20% | 77.60% | |
78 Outperform | $68.95B | 142.71 | 5.93% | ― | 28.46% | 185.04% | |
74 Outperform | $98.63B | 48.85 | 51.50% | ― | 43.56% | 91.72% | |
59 Neutral | $38.75B | 241.98 | 3.76% | ― | 24.14% | -88.77% | |
59 Neutral | $11.22B | 10.13 | -1.22% | 3.96% | 1.32% | -18.57% |
* Consumer Cyclical Sector Average
Performance Comparison
PDD
PDD Holdings
104.21
-13.41
-11.40%
MELI
Mercadolibre
1,841.29
352.71
23.69%
JD
JD
36.81
10.87
41.90%
BABA
Alibaba
116.54
46.34
66.01%
SE
Sea
106.63
50.65
90.48%
CPNG
Coupang
20.06
1.63
8.84%
PDD Holdings Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: -17.24% | 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.Highlights
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.
Lowlights
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.