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PDD Holdings (PDD)
NASDAQ:PDD
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PDD Holdings
(NASDAQ:PDD)81Outperform
Positive Factors
Market Expansion
Overseas expansion is a key growth driver with the launch of Temu in North America, leveraging social commerce expertise to attract price-sensitive consumers.
Merchant Support and Revenue Growth
PDD Holdings demonstrated a commitment to enhancing merchant experience, with online marketing services and other revenue rising by 24.3%, and transaction services revenue growing by 71.5% year over year to RMB50.0bn.
Negative Factors
Profitability Decline
Management reiterated its commitment in merchant support and investment in agriculture, implying its determination to drive declining trend of profitability in the long run.
PDD Holdings (PDD) vs. S&P 500 (SPY)
Market Cap
$157.50B
Dividend YieldN/A
Average Volume (3M)9.47M
Price to Earnings (P/E)11.8
Beta (1Y)1.25
Revenue Growth84.13%
EPS Growth122.96%
CountryUS
Employees17,403
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)10.17
Shares Outstanding1,388,770,600
10 Day Avg. Volume10,434,988
30 Day Avg. Volume9,470,106
Financial Highlights & Ratios
PEG Ratio0.10
Price to Book (P/B)N/A
Price to Sales (P/S)4.60
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
$144.33Price Target Upside20.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
PDD Holdings Business Overview & Revenue Model
Company DescriptionPinduoduo, Inc. operates as a holding company, which engages in the development and management of an e-commerce platform. Its Pinduoduo mobile application offers a selection of merchandise for buyer acquisition and engagement. The company was founded by Hua Lin Cai and Zheng Huang on April 20, 2015 and is headquartered in Shanghai, China.
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 shows strong financial health with impressive revenue and profit growth. The income statement, balance sheet, and cash flow scores reflect robust profitability, low leverage, and excellent cash flow generation, signifying effective management and financial stability.Income Statement
PDD Holdings demonstrates impressive revenue growth, with a TTM revenue of ¥372 billion, up from ¥248 billion in the previous year, marking a strong trajectory. The gross profit margin is robust at 62% for TTM, and net profit margin stands at a healthy 29%. Both EBIT and EBITDA margins are strong, indicating efficient operations. The company shows consistent profitability improvements over the years with significant expansions in both revenue and profit margins.92
Very Positive
Balance Sheet
The balance sheet reveals a solid financial position with a favorable debt-to-equity ratio of 0.04, indicating low financial leverage. The return on equity is strong at 39%, reflecting effective utilization of shareholders' funds. The equity ratio is 60%, underscoring a stable financial structure with a significant portion of assets financed by equity. These factors suggest a well-managed balance sheet with minimal risk.88
Very Positive
Cash Flow
Cash flow analysis shows remarkable growth, with free cash flow increasing from ¥93 billion to ¥129 billion in the TTM. The operating cash flow to net income ratio is favorable, indicating strong cash-generating capability relative to reported earnings. Free cash flow covers net income effectively, highlighting excellent liquidity and operational efficiency. The company maintains robust cash flow management, essential for sustaining growth and flexibility.95
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 372.11B | 247.64B | 130.56B | 93.95B | 59.49B | 30.14B | Gross Profit |
| 230.93B | 155.92B | 99.10B | 62.23B | 40.21B | 23.80B | EBIT |
| 105.23B | 58.70B | 30.40B | 6.90B | -9.38B | -8.54B | EBITDA |
| 110.70B | 59.48B | 39.21B | 12.53B | -8.73B | -7.90B | Net Income Common Stockholders |
| 108.27B | 60.03B | 31.54B | 7.77B | -7.33B | -6.56B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 217.21B | 217.21B | 149.44B | 92.94B | 86.97B | 41.06B | Total Assets |
| 348.08B | 348.08B | 237.12B | 181.21B | 158.91B | 76.06B | Total Debt |
| 10.17B | 10.17B | 16.93B | 12.76B | 16.97B | 6.65B | Net Debt |
| -49.63B | -49.63B | -17.39B | 6.33B | -5.45B | 881.57M | Total Liabilities |
| 160.84B | 160.84B | 119.35B | 106.10B | 98.73B | 51.41B | Stockholders Equity |
| 187.24B | 187.24B | 117.77B | 75.11B | 60.18B | 24.65B |
| Cash Flow | Free Cash Flow | ||||
| 128.69B | 93.58B | 6.40B | 25.50B | 28.15B | 14.79B | Operating Cash Flow |
| 129.27B | 94.16B | 7.03B | 28.78B | 28.20B | 14.82B | Investing Cash Flow |
| -104.28B | -55.43B | -3.24B | -35.56B | -38.36B | -28.32B | Financing Cash Flow |
| -8.97B | -8.96B | 1.46M | -1.88B | 51.80B | 15.85B |
PDD Holdings Technical Analysis
Positive
120.21
Price Trends
109.26
Positive
112.18
Positive
121.82
Negative
Market Momentum
1.79
Positive
55.13
Neutral
20.32
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PDD, the sentiment is Positive. The current price of 120.21 is above the 20-day moving average (MA) of 119.07, above the 50-day MA of 109.26, and below the 200-day MA of 121.82, indicating a neutral trend. The MACD of 1.79 indicates Positive momentum. The RSI at 55.13 is Neutral, neither overbought nor oversold. The STOCH value of 20.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $312.64B | 18.26 | 11.97% | 0.75% | 4.28% | 28.42% | |
81 Outperform | $157.50B | 11.82 | 48.55% | ― | 84.13% | 122.96% | |
79 Outperform | $65.56B | 13.05 | 15.11% | 1.81% | 1.88% | 49.67% | |
78 Outperform | $75.99B | 789.91 | 1.27% | ― | 20.20% | -86.31% | |
76 Outperform | $104.43B | 56.05 | 51.50% | ― | 43.56% | 91.72% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
PDD
PDD Holdings
120.21
3.57
3.06%
MELI
Mercadolibre
2,112.77
587.18
38.49%
JD
JD
43.76
19.53
80.60%
BABA
Alibaba
141.03
68.87
95.44%
SHOP
Shopify
106.15
32.14
43.43%
SE
Sea
146.31
87.09
147.06%
PDD Holdings Earnings Call Summary
Earnings Call Date: Nov 21, 2024 | % Change Since: 3.19% | Next Earnings Date: Mar 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant strategic investments in merchant support and logistics, contributing to robust revenue and net income growth. However, the company faced challenges from increased competition and rising operating expenses, which moderated revenue growth and impacted profitability.Highlights
Revenue and Net Income Growth
PDD Holdings reported revenues of RMB 99.4 billion and a net income of RMB 25 billion for Q3 2024, showing a strong financial performance despite market challenges.
CNY 10 Billion Fee Reduction Program
The program led to significant cost savings and efficiency gains for over 10 million merchants, with substantial fee reductions and enhanced after-sales support.
High-Quality Merchant Support Program
The program empowered merchants with strong product and technology innovation capabilities, driving growth in agricultural regions and industrial belts.
Logistics and Ecosystem Enhancements
PDD eliminated transshipment fees for orders to Western China, promoting e-commerce services in remote regions and driving significant order volume growth.
Research and Development Investments
R&D expenses increased to RMB 2.4 billion, reflecting a focus on strengthening core technology capabilities, which are foundational for supply chain innovation.
Lowlights
Moderation in Revenue Growth
Revenue growth moderated amid intensified competition and external challenges, with profits trending lower due to investments in ecosystem development.
Increased Operating Expenses
Total operating expenses increased 39% year-over-year to RMB 35.4 billion, driven by higher fulfillment and payment processing fees.
Competitive Pressures in Domestic Market
Intense competition in China's e-commerce market led to a slowdown in revenue growth, affecting profitability.
Company Guidance
During the PDD Holdings Q3 2024 earnings call, the management provided guidance emphasizing their continued investment in high-quality development strategies, which include a CNY 10 billion fee reduction program and a high-quality merchant support program. These initiatives are designed to enhance the platform ecosystem and support over 10 million merchants, contributing to both cost savings and efficiency gains. Financially, the company reported revenues of RMB 99.4 billion and a net income of RMB 25 billion, noting a moderation in revenue growth and profitability due to intensified competition. Despite a slight decline in profitability, PDD remains committed to long-term investments, focusing on expanding their supply chain and enhancing compliance capabilities to foster sustainable growth. Additionally, the company is navigating evolving consumption trends, especially during the Double 11 shopping festival, and is adapting to challenges in the competitive e-commerce landscape both domestically and globally.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.