Bull of the Day: PDD Holdings (PDD) – June 17, 2024

Pinduoduo or Zacks stock is #1 (Strong Buy). PDD holdings ((PDD – Free Report) ) is a Chinese e-commerce platform founded in 2015. Although PDD is much younger than its rivals such as Alibaba Group ((WOMAN – Free Report) ) Or VIP Shop holdings ((VIPs – Free Report) ), PDD has gained considerable popularity in a relatively short time, becoming one of the largest e-commerce companies in China.

Ago, an emerging e-commerce giant

Ago, e-commerce website PDD put PDD on the map. Ago is an online trading and e-commerce platform that has gained popularity thanks to its wide range of products at affordable prices. Launched in September 2022, the e-commerce platform is available in both China and the United States. The Temu app gained a huge following and quickly established itself in the e-commerce market in the United States after PDD management decided to purchase expensive advertising for the Super Bowl in 2023.

Amazon vs Temu

Traditionally, Amazon ((AMZN – Free Report) ) took over the American e-commerce market and dominated the foreign and domestic markets. However, Temu takes a unique approach and caters to a growing niche. Rather than assuming that customers would prefer products shipped to them immediately and at a slightly higher cost, Temu serves a small but rapidly growing segment of the market that is willing to wait for lower prices.

Instead of sourcing products from several different intermediaries, Temu uses a marketplace model that connects buyers directly with sellers and ships cheap goods directly from China. Even though products take longer to ship than Amazon’s goods, for example, American e-commerce customers who have suffered from persistent and rampant inflation are willing to wait longer to save money.

PDD Holdings: Profits soar

PDD is growing faster than almost every public e-commerce company. Wall Street sees continued rapid growth and expects EPS growth of approximately 97% next quarter and EPS growth of 85% for full-year 2024.

Image Source: Zacks Investment Research

PDD The history of bullish EPS

While PDD’s expectations are high, the company has shown it can consistently exceed Wall Street expectations. Over the last four quarters, PDD has exceeded EPS expectations by an average of 45%.

Image Source: Zacks Investment Research

Relative power versus peers

Relative price action is one of the simplest and most effective indicators in an investor’s toolkit. PDD has grown by 88.5% while other industries such as BABA lag behind (-15%).

Image Source: Zacks Investment Research

Bottom line

PDD’s unique Temu platform helps e-commerce buyers fight inflation while rapidly increasing company profits.