News

PDD Holdings PDD is slated to report third-quarter 2024 results on Nov. 21.

For the third quarter, the Zacks Consensus Estimate for revenues is pegged at $14.47 billion, indicating growth of 53.36% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pinned at $2.82 per share, suggesting 81.94% growth from the prior-year quarter’s reported number. The figure has been revised 2.9% upward over the past 30 days.

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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

PDD has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 10.73%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 41.14%.

PDD Holdings Inc. Sponsored ADR Price and EPS Surprise

PDD Holdings Inc. Sponsored ADR price-eps-surprise | PDD Holdings Inc. Sponsored ADR Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for PDD Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

PDD has an Earnings ESP of -0.89% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping Upcoming Results

PDD Holdings is poised for another strong quarter as it continues to execute its high-quality development strategy across multiple fronts. The company's innovative approach to agricultural digitization, particularly through its agriculture cloud initiative and partnerships with China Agriculture University, demonstrates its commitment to modernizing traditional sectors while creating sustainable value chains. This strategic focus is likely to have strengthened its competitive position in the crucial agricultural e-commerce segment in the quarter under review.

The company's investment in supply chain efficiencies and merchant ecosystem development shows promising potential for long-term growth. The company’s significant commitment to supporting high-quality merchants through a RMB10 billion transaction fee reduction program should drive increased merchant adoption and platform quality improvements. This initiative, combined with the enhanced trust and safety capabilities, is likely to have positioned PDD to capture a larger share of premium consumer segments while maintaining its value-conscious customer base in the third quarter.

Investors should note PDD's strategic emphasis on technological innovation, particularly in streamlining merchant onboarding and product listing processes. Its dual approach of automated screening and manual review demonstrates a sophisticated balance between scale and quality control. This infrastructure investment, while impacting short-term profitability, strengthens the competitive moat and long-term market position.

The company's performance in second-quarter 2024, with an 86% year-over-year revenue increase to RMB97.1 billion, provides a strong foundation for the third quarter. While management has indicated that profitability may trend lower due to strategic investments, this should be viewed positively as it reflects a commitment to sustainable growth rather than short-term profit maximization. The company's robust cash position of RMB284.9 billion provides ample resources to fund these strategic initiatives while maintaining financial flexibility.

The growing diversity in consumer preferences, particularly the shift toward experience-based consumption and rational purchasing decisions, aligns well with PDD's platform capabilities. Its success in helping both new and established brands adapt to these changing preferences through customized products and digital innovation suggests strong potential for continued market share gains in the quarter under review.

These factors, combined with PDD's clear strategic vision and strong execution capability, make it an attractive investment opportunity ahead of third-quarter results, particularly for investors focused on long-term value creation in the evolving e-commerce landscape.

PDD Holdings faces stiff competition in the domestic and international e-commerce markets. Its global business is still in the exploration stage, and therefore, it continues to reel under competitive pressure from behemoths like Amazon AMZN, eBay EBAY and Alibaba BABA.

Price Performance & Valuation

PDD shares have lost 19.6% in the year-to-date period, underperforming the industry’s decline of 6.8% and the S&P 500 index’s growth of 24%.

Year-to-date Price Performance

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Now, let us look at the value that PDD Holdings offers to its investors at current levels.

Currently, PDD is trading at a discount with a forward 12-month P/E of 8.94X compared with the industry’s 15.35X, reflecting a good investment opportunity.

PDD’s P/E F12M Ratio Depicts Discounted Valuation

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Investment Thesis

PDD Holdings presents a compelling investment opportunity ahead of third-quarter 2024 results, driven by its strategic pivot toward high-quality development and supply chain optimization. The company's robust agricultural digitization initiatives, coupled with its RMB10 billion merchant support program, position it favorably for sustainable growth. Despite management's guidance for lower near-term profitability, this reflects strategic investments in platform quality and technological infrastructure rather than operational weaknesses. With RMB284.9 billion in cash reserves and strong second-quarter performance showing 86% revenue growth, PDD's commitment to long-term value creation through innovation and ecosystem development makes it an attractive investment for forward-looking investors.

Conclusion

PDD Holdings presents a compelling buying opportunity at current valuations, given its robust ecosystem development, strategic investments in agricultural digitization and strong cash position. With its proactive approach to merchant support and technological innovation, coupled with proven execution capabilities, PDD is well-positioned to deliver sustainable long-term value for investors despite near-term profit moderation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.