From Nasdaq: 2024-09-17 09:30:00

On February 17, 2021, PDD’s stock closed at a record high of $202.82, representing a 10-bagger gain from its IPO price of $19. However, it now trades around $95, after losing over half its value due to cooling growth and macro headwinds. Still, PDD remains a potential multibagger growth stock.

PDD quickly rose to become China’s third-largest e-commerce company after Alibaba and JD.com. It focused on lower-income shoppers in lower-tier cities and launched a farm-to-table platform, disrupting traditional grocers. PDD also expanded overseas with Temu, a cross-border marketplace, gaining over 167 million monthly active users worldwide.

While PDD’s growth rates were impressive, cautious comments during its Q2 conference call in August 2023 led to a stock decline. CEO Lei Chen warned of challenges ahead, which might require increased investments. However, similar warnings from other successful e-commerce leaders have resulted in growth once investments boosted profits.

Analysts expect PDD’s revenue to grow at a CAGR of 36% from 2023 to 2026, with EPS rising at a CAGR of 39%. Despite its growth potential, PDD trades at just 7 times next year’s earnings, compared to Alibaba and JD at 14 and 8 times forward earnings, respectively. If PDD meets expectations, its stock price could soar nearly tenfold by 2034.

While PDD faces near-term macro and competitive headwinds, it remains a potential multibagger growth stock in the long term. Investors should consider the company’s growth potential and valuation before making investment decisions.



Read more at Nasdaq: PDD Holdings Stock Is Beaten Down Now, but It Could 10x