In 2021, China's technology stocks peaked after the government cracked down on the industry. Pinduoduo renamed itself to PDD Holdings. Last year, PDD stock bottomed at $40 and traded as high as $100. The slump to $60 ended when it posted strong Q1 results.
PDD gained 18.99% on 5/26/2023 after it reported revenue growth of 58.0% Y/Y to $5.48B. Non-GAAP EPADS was $1.01 a share. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer said that “We are launching a dedicated ‘10 Billion Ecosystem Initiative’ to facilitate an environment where quality merchants can flourish.”
JD.com (JD) and Alibaba (BABA), PDD’s competitors, likely lost significant market share in the quarter. It beat the market’s conservative expectations after its research and development drove its growth. As the industry recovers, PDD has a solid foundation to improve its platform ecosystem.
Co-CEO Zhao said that it will enter a cycle of improving its platform ecosystem. For example, it will upgrade its consumer services and increase support for quality supply. By leveraging its expertise in the supply chain, PDD will widen its moat against JD.com and Alibaba.
PDD is a stock to watch. This is not a stock to chase after the strong run-up. It already rewarded those who bet on a strong quarter.
