May 23, 2024

Pinduoduo has jumped on earnings and trades at the highest level since 2021.

PDD-–-Weekly-ChartPDD – Weekly Chart 

PDD ADR shares jumped to a fresh year-high of around $155. The market will test the 2024 highs at $153.23, the critical resistance level. 

Temu-parent PDD Holdings Inc. released first-quarter earnings with revenue that came in more than double analysts’ expectations. PDD rose X on Wednesday after reporting March-quarter revenue of 86.8 billion renminbi ($12 billion), up from 37.6 billion renminbi. That was well ahead of consensus estimates for 75.9 billion renminbi. 

The company posted a net income of 28 billion renminbi or 18.96 renminbi. A year earlier, PDD posted a net income of 8.1 billion renminbi, or 5.55 renminbi a share. On an adjusted basis, the company posted 20.7 renminbi in earnings per share, almost double the consensus of 10.49 renminbi. 

UBS recently raised its price target for Pinduoduo shares from $217 to $248, maintaining a Buy rating. The bank’s optimism is driven by expectations for Temu, Pinduoduo’s overseas platform, aimed at low-income consumers. UBS is confident that investors may be underestimating Temu’s potential for significant market expansion, which could result in higher margins. 

Another boost for the company was support from American billionaire hedge fund manager David Tepper. The investment manager’s firm, Appaloosa Management, purchased 1.33 million shares in the first quarter 2024. PDD is now 3.6% of Tepper’s overall portfolio. 

Further strength above the 2024 highs could set up the next big target: the all-time high of around $211.

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