To The Moon

$Pinduoduo Inc.(PDD)$ is expected to release earnings on 28 Nov 2023 before market open.

PDD reported its Q2 earnings on 29 Aug 2023 where PDD shares gained +15.4% the day following the earnings announcement to close at 93.22.

Following its earnings release, 90 days ago, PDD stock has drifted +27.3% higher. From the time it announced earnings,

PDD traded in a range between 91.21 and 120.31. The last price (118.70) is closer to the higher end of range.

PDD’s growing efforts to drive innovation across its products and services through advanced technologies are likely to have continued benefiting its upcoming results.

The company’s strength across the e-commerce business on the back of well-performing Pinduoduo is likely to have contributed significantly to the third quarter’s performance.

The upcoming results should reflect PDD’s strengthening efforts toward the integration of online traffic with offline retail experiences. Something to watch would be PDD’s growing efforts to bolster agriculture and grocery businesses, this part should be contributing to the top line in the upcoming quarter.

The reported quarter performance should be boosted by strengthened partnerships with local communities, shops, farmers and agri-merchants.

Pinduoduo (PDD) Past EPS and Revenue Surprise

PDD has been giving positive surprise in past 2 quarters earnings, and the share price have also benefitted significantly from this surprise.

Pinduoduo (PDD) Historical Moves Ahead of Earnings

PDD historically moved higher heading into earnings more often than not. On average, the stock gained 2.7% for the 2 week period before earnings (based on the last 12 quarters of data).

Pinduoduo (PDD) Historical Stock Price Reaction to Earnings

PDD shares have moved higher in the immediate aftermath of earnings 7 out of 12 previous reports. On average the stock moved up 5.9% in the first day of trading after the company reported earnings.

Pinduoduo (PDD) Stock Behavior After Earnings

Based on the previous 12 earnings releases, PDD is more likely to trade higher 1 day after earnings for an average gain of 3.2%.

PDD has a more than 40% year-to-date (YTD) and PDD should have a nice upside after its earning result on 28 Nov 2023.

Pinduoduo (PDD) Post Earnings Announcement Drift

PDD share price has drifted up 27.3% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is -1.1%. The current drift represents a positive 1.1 standard deviation move.

• Current post earnings announcement drift: 27.3%

• Historical average post earnings announcement drift: -1.1%

• Historical post earnings drift standard deviation move: ±23.8%

Pinduoduo (PDD) Post Earnings Movement

The options market overestimated PDD stocks earnings move 25% of the time in the last 12 quarters. The predicted move after earnings announcement was ±11.9% on average vs an average of the actual earnings moves of 14.0% (in absolute terms).

This shows you that PDD tended to be more volatile than the options market predicted for the earnings stock price reaction.

Pinduoduo (PDD) Earnings Implied Volatility Crush

PDD's last earnings implied volatility (IV30) going into earnings was 56.3. The last time PDD released earnings, the implied volatility dropped to 42.6, resulting in an implied volatility crush of 24%. 5 days after earnings, the 30 day IV was 38.7.

• Average Implied Volatility Crush For PDD Earnings: 20%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 80.1

• Average PDD 30 Day IV for the Day of Earnings: 64.0

• Average 30 Day Implied Volatility 5 Days After Earnings: 64.0

Summary

We should be expecting some positive news and performance from PDD’s efforts, I am expecting that the share price should have a nice surge after earning result in pre-market.

Option implied volatility have also point to upside expectation. I would be monitoring the price action and would like to take a quick profit trade if possible,

Appreciate if you could share your thoughts in the comment section whether you think PDD would be able to beat market’s estimate and give us a good surprise in its share price?

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.