PDD Holdings: Mixed Outlook with Revenue and Profit Challenges Amid Market Expansion

Bank of America Securities analyst Joyce Ju reiterated a Hold rating on PDD Holdings (PDD – Research Report) today and set a price target of $120.00.

Joyce Ju’s rating is based on a combination of factors affecting PDD Holdings’ financial performance. The company’s recent quarterly results fell short of market expectations, with a significant slowdown in transaction revenue growth and a notable decline in non-GAAP profits. Management has identified several challenges impacting earnings, including reduced benefits from trade-in subsidies, increased tariffs, and uncertain trade policies affecting its largest market, the US. Additionally, a proactive reduction in merchant fees has further pressured revenues.
Despite healthy growth in online marketing revenues, domestic marketplace commissions have decreased, indicating a lower core marketplace take rate. The company is also facing continued losses from its TEMU operations and increased subsidies in certain product categories. While these pressures are expected to ease in the coming quarters, the company’s ongoing investments and adjustments to its ecosystem support program have led to a downward revision of revenue and profit forecasts for the next few years. Consequently, Joyce Ju has maintained a Hold rating, reflecting the mixed outlook of rapid market expansion and low earnings visibility.

In another report released today, J.P. Morgan also reiterated a Hold rating on the stock with a $105.00 price target.