Formerly Pinduoduo, PDD's stock surge fuels broad bounce in U.S.-listed shares of China-based companies

By Tomi Kilgore

PDD's stock soars toward biggest gain in 14 months after Q1 profit and revenue beat expectations by wide margins

The U.S.-listed shares of China-based companies enjoyed a broad rally Friday, fueled by a big rally in shares of PDD Holdings Inc. after the mobile marketplace company's first-quarter results beat by wide margins.

The Invesco Golden Dragon China exchange-traded fund (PGJ) surged 2.9% in midday trading, with 48 of its 63 equity components gaining ground. The rally comes after the ETF (PGJ), which tracks the American depositary shares of companies based in China, excluding Hong Kong, had closed Thursday at a six-month low.

Shares of PDD (PDD), formerly known as Pinduoduo, powered up 16.9% to pace the PGJ's gainers. The stock, which had closed Thursday at the lowest price since Nov. 9, was on track for the biggest one-day percentage gain since it climbed 18.9% on March 22, 2022.

The company reported before the opening bell net income that more than doubled, to RMB8.10 billion ($1.18 billion), or RMB5.55 per American depositary share, from RMB2.60 billion, or RMB1.84 in the year-ago period. Excluding nonrecurring items, adjusted earnings per ADS of RMB6.92 was well above the FactSet consensus of RMB4.46..

Revenue grew 58.1% to RMB37.64 billion ($5.48 billion), to beat the FactSet consensus of RMB32.18 billion. Revenue from online marketing services increased 50% to RMB27.24 billion and transaction services revenue jumped 86% to RMB5.59 billion.

"We see clear recovery trends," said Co-Chief Executive Officer Jiazhen Zhao in a post-earnings conference call with clients, according to an AlphaSense translation of the transcript. "Online retail continues to pick up. Users continue to show a higher willingness to shop."

These trends lay a "solid foundation" for steady growth in consumption for the whole year," Jiazhen Zhao said.

Among other more-active PGJ components, shares of electric vehicle maker Nio Inc. (NIO) rose 2.0%, ecommerce giant Alibaba Group Holding Ltd. (9988.HK) climbed 3.0%, EV-maker XPeng Inc. (XPEV) rose 0.9%, ecommerce company JD.com Inc. (JD) jumped 2.4% and after-school tutoring services provider TAL Education Group (TAL) tacked on 8.0%.

The PGJ's second-biggest gainer was cryptocurrency miner Bit Digital Inc.'s stock (BTBT), which ran up 10.5%, as bitcoin rose 1.1%.

Meanwhile, the PGJ's biggest decliner was Canaan Inc.'s stock (CAN), which tumbled 21.1%. The company, which is currently focused on research and development of technology in areas including artificial intelligence (AI) semiconductors and algorithms, reported before Friday's open a narrower-than-expected first-quarter loss but revenue that surprisingly declined.

The PGJ has lost 7.4% year to date, while the S&P 500 index has gained 9.3%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-26-23 1212ET

Copyright (c) 2023 Dow Jones & Company, Inc.