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Investment Thesis
Ever since the PDD Holdings' (NASDAQ:PDD) ominous earnings call in August last year, the stock has been caught in a bind. Then, the Q3 earnings report that followed a few months
PDD's Outlook Changes With De Minimis Boom-Bust, Amazon Headwinds
Summary
- PDD Holdings faces significant headwinds including regulatory scrutiny in China, global trade uncertainties, and intensified competition from Amazon's new Haul service.
- Revenue growth has begun decelerating, with margins under pressure, and consensus estimates predict further normalization of growth rates to ~29% in Q4.
- PDD's valuation premium is not appealing given the elevated risks, with expected earnings growth of just 12.8% in 2025 compared to 25% sales growth.
- I recommend a Hold rating on PDD Holdings due to mid-term pressures on growth and margins, and the increasing competitive threats from Amazon.
Uttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of JD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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