Temu Parent PDD Surges On Strong Q1

Temu-parent company PDD Holdings (PDD) on Wednesday reported first-quarter earnings that easily exceeded expectations from analysts, with sales growth of 131%. PDD stock jumped in early trading before retreating to smaller gains later in the day.

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PDD Holdings said early Wednesday that it earned an adjusted 20.72 Chinese yuan ($2.83) per share from sales of 86.8 billion yuan ($12 billion) for the March-ended quarter. On average, analysts projected the Chinese e-commerce company would post adjusted earnings of 10.49 yuan per share on sales of 75.9 billion yuan, according to FactSet.

For the same period a year earlier, PDD Holdings posted adjusted earnings of 6.92 yuan per share on sales of 37.6 billion yuan.

On the stock market today, U.S.-listed PDD stock rose 1.1% to close at 147.09 on Wednesday. Shares gained as much as 7% in premarket action immediately following the report.

PDD: Temu and Pinduoduo Parent Company

PDD Holdings includes the China-focused e-commerce platform Pinduoduo and international discount retail platform Temu. Shares of PDD surged nearly 80% in 2023, as Temu expanded rapidly in the U.S. and elsewhere. Powered by social media advertising and a Super Bowl commercial, Temu was the top downloaded app in the U.S. last year by a wide margin.

Meanwhile, both Alibaba (BABA) and JD.com (JD) posted better-than-expected sales for their March quarters last week. The tech giants are PDD’s main competitors in China.

Coming into its earnings report, PDD shares were trading roughly flat for 2024. PDD stock fell in the first months of the year amid concerns about consumer spending in China and regulatory concerns in the U.S.

While Temu spent billions on marketing to U.S. customers last year, the firm is reportedly focused more on other countries this year. The recent U.S. crackdown on TikTok and broader scrutiny of Chinese-founded technology firms contributed to the shift, as the Wall Street Journal reported last week. U.S. lawmakers have also questioned Temu’s compliance with laws barring companies from importing products made using forced labor.

PDD does not break out separate results for its Temu business and did not reference Temu by name on its call with stock analysts Wednesday morning. PDD co-founder and Chairman Lei Chen told analysts that its “global business is still in a exploration stage, and there’s plenty of room for improvement,” according to a FactSet transcript.

The company also will invest in building what Chen called an “industry-leading compliance program.”

PDD Stock: Technical Ratings

PDD stock had recently broken out past a cup-with-handle base buy point of 142.32, according to MarketSurge. Shares closed Tuesday in buy range.

Coming into the report, PDD stock had a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.

Further, PDD’s IBD Relative Strength Rating was 95 out of 99.

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