PDD stock surged on Tuesday after Temu parent company PDD Holdings reported third-quarter earnings and sales that easily topped Wall Street estimates.
For the quarter ending in September, PDD reported adjusted earnings of RMB 11.61 ($1.64) per share on sales of RMB 68.8 billion ($9.7 billion). On average, analysts polled by FactSet expected PDD to earn $1.25 per share on $7.7 billion in sales.
Sales climbed 94% in local currency while earnings increased 35% year over year.
PDD Holdings includes the China-focused e-commerce platform Pinduoduo, international discount retail platform Temu and several subsidiaries, including real estate and technology companies.
On the stock market today, PDD stock gained 18% to 139.
PDD Stock: Temu's International Push
U.S.-listed PDD stock has gained 40% this year entering trading Tuesday, with its discount-focused Temu shopping platform expanding rapidly.
Temu is seen as a potential challenger to Amazon in the U.S. PDD also competes with Alibaba in China and fast-fashion online retailer Shein internationally. Shein has confidentially filed to go public in the U.S., the Wall Street Journal reported late Monday.
Alibaba and competing Chinese e-commerce firm JD.com this year have focused on offering more discounts, in response to competition from PDD and concerns about consumer spending in China.
Further, PDD has spent big on advertising to gain market share for Temu in the U.S. and elsewhere. Total operating expenses climbed 44% in local currency to $3.5 billion in the third quarter. PDD said the total reflected an increase in sales and marketing expenses.
"Under our high-quality development strategy, we increased our investment in technology and further deepened user mindshare in the third quarter," said Jun Liu, vice president of finance at PDD Holdings, in a news release.
Meanwhile, the earnings performance highlights a strong year for PDD stock. IBD Stock Checkup places PDD as the third best-performing stock in the retail-internet group. PDD trails only Latin American e-commerce firm MercadoLibre and auction services company Liquidity Services .
Further, PDD stock has an IBD Composite rating of 98 out of a best-possible 99. The score means PDD stock currently tops 98% of all other stocks in terms of key performance metrics and technical strength.
