PDD Holdings reported mixed fourth-quarter results early Thursday as earnings beat forecasts but its slowing sales growth missed estimates. U.S.-listed PDD stock gained on the day despite initially pushing lower on the results.
PDD Holdings said that it earned an adjusted 20.15 yuan per American depositary share on sales of 110.6 billion yuan, or $15.3 billion, for the December-ended quarter. Analysts polled by FactSet projected the e-commerce company would post adjusted earnings of 19.85 yuan per ADS on sales of 113.6 billion yuan.
Revenue grew 24%, slowing from the 44%, 86% and 131% growth PDD posted in the three previous quarters. Adjusted earnings-per-share increased 16% year over year.
On the stock market today, U.S.-listed PDD stock gained 4% to close at 130.92. Shares were down as much as 7% in premarket trading.
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Temu, Pinduoduo Face Stepped-Up Competition
PDD Holdings operates the Pinduoduo e-commerce platform in China. The shopping website and app has challenged incumbents such as Alibaba and JD.com for e-commerce market share. The company is based in Dublin, Ireland after moving its headquarters from China in 2023.
PDD's explosive growth in 2023 and into last year was powered by the discount-focused international website Temu, which PDD launched late in 2022. Helped by big spending on advertising from PDD that included a Super Bowl ad, Temu emerged as a challenger to Amazon and other global e-commerce brands. Temu facilitates direct sales from Chinese merchants in dozens of countries.
PDD stock has gained 30% this year amid a rally for China tech stocks. But the stock remains below highs from late last year. Shares tumbled in late November after the company posted a Q3 earnings miss and warned investors it was facing growing competition.
After its Temu-fueled rally in 2023, PDD stock is facing greater competition and uncertainty from the ongoing U.S.-China trade war. President Donald Trump earlier this year attempted to shut down the so-called de minimis policy that allows packages worth less than $800 to enter the U.S. duty free. Trump later reinstated the rule. But PDD has acknowledged that changes to U.S. trade policy could be a risk to its growth, as it could raise prices on the low-cost items that Temu sells to American shoppers from Chinese businesses.
Meanwhile, Amazon has launched a discount-focused challenger to Temu that operates with a similar direct-from-China model. And within China, both Alibaba and JD.com reported stronger-than-expected fourth quarter sales.
PDD Stock Technical Ratings
Coming into its Q4 report, PDD stock had an IBD Composite Rating of 98 out a best-possible 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.
PDD's Relative Strength Rating, meanwhile, was 86 out of 99. The RS Rating means that the Temu parent company's shares have outperformed 86% of all stocks in IBD's database over the past year.
