Aug 28, 2023

E-commerce company Pinduoduo (PDD) is the latest Chinese retailer to report earnings. Here are the price levels to watch for the week ahead:

PDD Weekly Chart

PDD: Weekly chart

Pinduoduo shares are currently trading at $79, with the next resistance target at $90. A break below $70 could lead further to key support around $60.

JD.com, Tencent, and Alibaba all reported results for the three months ended in June, showing a steady pick-up in consumer spending, but it’s unclear whether that growth will continue. JD.com’s electronics revenue increased, but consolidated merchandise sales declined in the quarter.

Pinduoduo shares have fallen 3 percent this year due to heightened competition and concerns about China’s economic growth. Pinduoduo’s earnings per share are expected to be $1.12, implying negative growth of -0.88% compared to the same period last year. Revenue is expected to grow by 30.8% to $6.14 billion.

The company’s earnings expectations have beaten expectations in all four quarters, and if we take early data released by retailers as a reference, this trend is likely to continue. This has led analysts to cut their second-quarter forecasts over the past week, leaving more room for potential surprise growth.

Pinduoduo has been affected by overseas growth concerns, while China’s situation has also lagged. Traders are looking for further government stimulus, which could be another driver of Pinduoduo’s rally.

JD.com has successfully weathered the impact of China’s economic slowdown by transitioning to low-priced products. This low-cost strategy allows it to compete more effectively and gain market share from competitors such as Pinduoduo.

China’s economic slowdown is mainly reflected in prices, which fell into deflation in July, with consumer prices falling 0.3% year-on-year due to weak domestic demand. Other developed countries have been battling inflation, another reason why China may receive direct stimulus to help consumers.

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