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PDD Holdings Inc ADR PDD

Morningstar Rating
$127.69 −3.94 (2.99%)
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Company Report

Raising PDD Holdings' Fair Value Estimate by 82% After Incorporating Temu Into Our Valuation

PDD Holdings is a social e-commerce platform that encourages users to enjoy lower prices by teaming up to make purchases. Easier sharing of PDD deals with social contacts through Tencent’s social network lead to lower traffic acquisition costs versus peers. The firm focused on low-tier cities and white-label merchants, followed by the CNY 10 Billion Program launched in 2019 to subsidize consumers for higher-priced products such as Moutai, Apple iPhones, and agricultural products. PDD aims to offer good value across a wide range of categories and price points. To increase average revenue per user, or ARPU, PDD uses subsidies to induce consumers to make purchases in categories they haven't purchased in before. PDD's active buyers in the year ended March were 882 million, likely higher than that of Alibaba, though we estimate its spending per active user was 37% of Alibaba. CEO Chen Lei expressed his goal in March 2021 to continue subsidies so as to replace Alibaba as the shopping platform of choice for the 1 billion consumers in China.

Price vs Fair Value

PDD is trading at a 40% discount.
Price
$127.69
Fair Value
$467.00
Uncertainty
Very High
1-Star Price
$575.71
5-Star Price
$938.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

PDD has the most incentive to put the most effort into increasing online sales of agricultural products. This should help it continue to attract continuous traffic.

Bears

Sales and marketing expense/sales ratio could be at a level higher than our bear-case scenario if monetization rate is stagnant. Profitability will suffer.

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News

Trading Information

Previous Close Price
$131.63
Day Range
$124.18133.90
52-Week Range
$59.67152.99
Bid/Ask
$125.60 / $125.61
Market Cap
$169.65 Bil
Volume/Avg
10.3 Mil / 7.8 Mil

Key Statistics

Price/Earnings (Normalized)
24.94
Price/Sales
6.86
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

PDD Holdings (Nasdaq: PDD) is a multinational commerce group that owns and operates a portfolio of businesses. PDD Holdings aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfilment capabilities, that support its underlying businesses.
Sector
Consumer Cyclical
Industry
Internet Retail
Stock Style Box
Total Number of Employees
12,992

Competitors

Valuation

Metric
PDD
BABA
JD
Price/Earnings (Normalized)
24.948.287.54
Price/Book Value
7.901.291.15
Price/Sales
6.861.440.24
Price/Cash Flow
16.257.014.44
Price/Earnings
PDD
BABA
JD

Financial Strength

Metric
PDD
BABA
JD
Quick Ratio
1.431.711.02
Current Ratio
1.831.801.36
Interest Coverage
1,007.6793.0210.96
Quick Ratio
PDD
BABA
JD

Profitability

Metric
PDD
BABA
JD
Return on Assets (Normalized)
21.39%8.98%5.84%
Return on Equity (Normalized)
41.38%15.96%15.82%
Return on Invested Capital (Normalized)
32.47%12.33%9.19%
Return on Assets
PDD
BABA
JD
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Economic Moat
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