From Financial Modeling Prep: 2025-05-12 11:54:00

Citi upgraded Pinduoduo’s rating from Neutral to Buy, with a new price target of $165, citing a more favorable U.S. tariff environment and improved profitability outlook for its Temu platform. The reduction in tariffs is seen as a key tailwind for Chinese cross-border sellers, with Temu’s strategic pivot and price increases helping absorb tariff impacts effectively.

Chinese sellers are expected to manage cost burdens through price passthrough to U.S. consumers and cost savings, including lower ad spend and production efficiencies. Focus on selling higher quality, higher-priced goods is anticipated to support margins. Pre-stocked inventory in the U.S. could drive better profits for Temu in Q2 2025.

With the tariff overhang diminished, Citi sees a clearer path for growth and profitability for Pinduoduo, justifying the rating upgrade. The earlier-than-expected reduction in tariffs and Temu’s strategic adjustments position the company well to navigate the evolving U.S. tariff environment and drive improved financial performance.



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