To The Moon

$PDD Holdings Inc(PDD)$ is expected to release its fiscal Q1 2025 earnings report on 23 May 2025.

Revenue Growth: Analysts anticipate revenue to be around RMB 103.368 billion.

Earnings Per Share (EPS): The consensus EPS forecast is around USD 2.25 (or RMB equivalent). Tipranks is expecting the EPS to come in at $2.60

PDD Holdings (PDD) Last Neutral Earnings Call Saw Share Price Declined By 6.60%

PDD Holdings had a neutral earnings on 20 March 2025 which saw its share price declined by 6.60% since.

PDD Holdings demonstrated strong revenue growth and successful merchant support initiatives, despite facing challenges such as rising costs, intense competition, and fluctuating profit margins. The company's commitment to agriculture and global business strategy show a focus on long-term development.

PDD Holdings (PDD) Guidance

During the fourth quarter and fiscal year 2024 earnings call for PDD Holdings Inc., the company reported significant financial and strategic metrics. The Q4 revenue reached RMB 110.6 billion, marking a 24% year-over-year increase, while the full-year 2024 revenue was RMB 393.8 billion, reflecting a 59% growth from the previous year. The company's revenue growth showed moderation, attributed to substantial ecosystem investments amid a competitive landscape.

Notably, the firm executed a 10 billion fee reduction program, which benefited over 10 million merchants, and logistics support measures that extended free shipping to nearly 100 million consumers in remote regions. The Merchant Rights Protection Committee was established to enhance communication and dispute resolutions. Operating profit for Q4 on a GAAP basis was RMB 25.6 billion, with a non-GAAP operating profit margin of 24%. The company held RMB 331.6 billion in cash, cash equivalents, and short-term investments as of December 31, 2024. Looking forward, the company emphasized its commitment to high-quality development in 2025, aiming to enhance merchant support and broaden quality supply on the platform.

Key Expectations for PDD Holdings Fiscal Q1 2025 Earnings

Revenue Growth: Analysts anticipate revenue to be around RMB 103.368 billion. While this represents a substantial figure, the year-over-year growth rate might be lower compared to the impressive 24% increase seen in Q4 2024. This could be due to various factors, including seasonal trends, the base effect of strong prior-year growth, and the evolving competitive landscape.

Q4 revenue reached RMB 110.6 billion, up 24% year-on-year, and full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year.

Earnings Per Share (EPS): The consensus EPS forecast is around USD 2.25 (or RMB equivalent). This suggests a potential year-over-year decrease compared to the USD 2.63 reported in Q1 2024. Investors will be keen to understand the reasons behind this anticipated decline, which could include increased investments in growth initiatives, particularly in their global expansion efforts with Temu, and potentially higher operating expenses.

Continued Investment in Growth: Expect PDD Holdings to highlight ongoing investments in its platform ecosystem, research and development (R&D), and sales and marketing. These investments are crucial for their long-term strategy of empowering small businesses, digitizing supply chains, and expanding their market share both domestically and internationally. The performance and growth trajectory of Temu will be a key area of interest for investors.

Impact of Global Expansion (Temu): Investors will be looking for updates on Temu's performance in international markets, particularly in North America and Europe. While Temu has shown rapid user growth, it's important to assess its contribution to overall revenue and its impact on profitability due to potentially high marketing and logistics costs. Recent concerns regarding the removal of de minimis tariff exemptions in the U.S. and potential regulatory headwinds might also be addressed.

Profitability Margins: It will be important to monitor PDD Holdings' profitability margins. Increased spending on sales and marketing to drive user acquisition for Temu, along with potentially higher fulfillment and payment processing fees, could put pressure on these margins in the short term.

Non-GAAP operating profit margin decreased from 28% in Q4 2023 to 24% in Q4 2024, despite an increase in non-GAAP operating profit.

User Engagement and Active Buyers: Updates on the number of active buyers and their engagement on Pinduoduo and Temu will be closely watched as indicators of the platforms' health and growth potential.

The 10 billion fee reduction program enabled over 10 million merchants to enhance operational efficiency and reduce cost. Logistic support measures drove double-digit order growth and extended free shipping to nearly 100 million consumers in remote regions.

Strategic Focus: Expect management to reiterate their commitment to a "high-quality development" strategy, emphasizing sustainable long-term growth over short-term gains. Their focus on integrating the digital economy with traditional sectors and supporting merchants and agricultural communities is also likely to be highlighted.

Continued focus on supplying high-quality products to global consumers while maintaining high compliance standards and exploring new business models.

Sustained investments in agriculture technology and supply chain innovation led to significant breakthroughs in yield, efficiency, and energy consumption.

Cash Flow and Financial Health: Investors will want to see the company's cash flow generation and its overall financial position. PDD Holdings has maintained a strong cash reserve, which provides flexibility for future investments and navigating market uncertainties.

Total cost of revenues increased 36% year-on-year for Q4 and 68% for the full year 2024 due to increased fulfillment fees and payment processing fees.

PDD Holdings (PDD) Price Target

Based on 37 analysts from Tiger Brokers offering 12 month price targets for PDD Holdings in the last 3 months. The average price target is $155.28 with a high forecast of $235.00 and a low forecast of $106.00. The average price target represents a 31.09% change from the last price of $118.45.

Potential Factors Influencing Q1 2025 Performance

Consumer Spending Trends: Overall consumer spending in China and global markets will influence PDD's e-commerce platforms.

Competition: The e-commerce landscape remains highly competitive, with players like Alibaba and JD.com continuously innovating. PDD's ability to differentiate itself and maintain its market share is crucial. Intense competition and changes in macro conditions and policies pose challenges, especially in the domestic e-commerce and global markets.

Regulatory Environment: Regulatory developments in China and in international markets where Temu operates could impact the company's operations and financial performance.

Macroeconomic Factors: Global economic conditions and any potential macroeconomic headwinds could affect consumer demand and supply chains.

Technical Analysis - Exponential Moving Average (EMA)

PDD Holdings is focusing on long-term growth, investing in its ecosystem, and expanding its global presence. Increased spending in sales and marketing reflects PDD's efforts to attract and retain users and expand its market share. The robust cash position provides the company with financial flexibility for future investments and growth initiatives.

Now we are seeing a consolidation from PDD recent trading, though we are seeing positive momentum shown by RSI, whether the bulls can continue to make a daily uptrend before its earnings on Friday (23 May).

There might be some factors like consumer spending trends, competition, and the performance of their global initiatives, particularly Temu, which could either be a catalyst or drag the share price down.

We are not seeing short interest increasing so there might chance that investors will be closely watching the upcoming Q1 2025 earnings report to see if PDD Holdings can maintain its growth trajectory and meet analyst expectations amid a dynamic and competitive e-commerce landscape.

So investors might only react after the earnings result or they could load more shares.

Summary

The fiscal Q1 2025 earnings report will provide valuable insights into PDD Holdings' ability to sustain its growth momentum, manage its global expansion effectively, and navigate the evolving market dynamics. While analysts predict continued revenue growth, a potential dip in EPS will likely be a key point of discussion during the earnings call.

I think as investors, we might want to stay focused on the company's strategic initiatives and their impact on both growth and profitability in the long run.

Appreciate if you could share your thoughts in the comment section whether you think PDD could deliver soundly result on its strategies initiatives.

@TigerStars @Daily_Discussion @Tiger_Earnings @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.