How am i trading PDD in this earning session ?
Summarize
After Pinduoduo (PDD) $Pinduoduo Inc.(PDD)$
Cat believes that it can buy the bullish price difference strategy combination bullish Pinduoduo (PDD) to earn the income from the rise of the stock price range.
Main body
1. What happened?
On May 26, Pinduoduo (PDD) announced its results for the first quarter of 2023. After the performance announcement, the stock price soared by 18.99%.
Performance data show that the revenue of Pinduoduo (PDD) in the first quarter increased by 222% year-on-year to 37.6377.1 billion yuan.
Under non-GAAP, operating profit increased by 130% year-on-year to RMB 8.462.4 billion, and net profit increased by 212% year-on-year to RMB 8.101 billion.
Gross profit increased by 59.38% year-on-year to 16.634 billion yuan, with a gross profit margin of 69.91%.
If you look at this quarter's performance from the perspective of whether the data exceeded expectations, Pinduoduo (PDD) was not bad in the first quarter. it is comparable to $Alibaba(BABA)$
Because of the epidemic in China in the same period last year, and Pinduoduo (PDD) was increasing investment in agricultural technology research and development and agricultural logistics layout, resulting in poor performance.
However, the performance of this quarter is not optimistic compared with the performance of Pinduoduo (PDD) in the fourth quarter of 2022.
In the first quarter, revenue fell 5.48% month-on-month, operating profit fell 27.42% month-on-month, net profit fell 33.08% month-on-month, gross profit fell 46.16% month-on-month, and gross profit margin fell below 70%.
Judging from the month-on-month data, the performance of Pinduoduo (PDD) in the first quarter was not optimistic, and all financial indicators showed a month-on-month decline.
Therefore, Cat believes that the sharp rise in the stock price of Pinduoduo (PDD) after Q1 is more driven by the good news that Pinduoduo (PDD) launched a special 10 billion ecosystem plan.
After the performance of Pinduoduo (PDD) was announced last quarter, the stock price plummeted because the market had doubts about the sustainable strategy of low-priced subsidies for the market.
The 10 billion ecosystem of Pinduoduo (PDD) shows that it has shifted its focus from growth rate to quality improvement, and actively transformed towards high-quality development.
The high-quality development and transformation strategy of Pinduoduo (PDD) is obviously what the market expects.
Of course, according to the data and models of the data company, the total GMV of Pinduoduo in Q1 in 2023 increased by 24.1% year-on-year to RMB 750.9 billion may also be one of the reasons for the rise of its stock price.
However, because the GMV value of Pinduoduo (PDD) is no longer published in its financial report, GMV's favorable promotion of the stock price can only be regarded as a conclusion derived from third-party data.
2. Trading ideas
For the above reasons, Cat believes that the stock price of Pinduoduo (PDD) is more likely to continue to rise in the future.
From the price behavior of Pinduoduo (PDD), it can also be seen that after the performance was announced, the trading volume increased and the stock price jumped, and it also stood at the 60-day moving average at the close.
This volume and price behavior also shows that the stock price of Pinduoduo (PDD) is likely to reverse the downward trend caused by the lower-than-expected performance of the previous quarter.
After the announcement of the results of the first quarter, it can also be seen that the number of abnormal CALLs in the abnormal options data of Pinduoduo (PDD) is slightly more than the number of abnormal PUTs.
In this regard, Cat believes that it can buy a bullish price difference strategy combination (1 * PDD 75C 7/21/23 - 1 * PDD 80C 7/21/23) slightly up Pinduoduo (PDD) and the market rose later.
The strategy is to earn the income of rising stock price range by buying low-executable call options at the same time and selling high-executable call options at the same time.
The main reason for Cat's construction of this option is that if Pinduoduo (PDD) rises in the future market, it is very likely to make up for the gap formed on March 17.
However, due to the month-on-month decline in the key financial data of Pinduoduo (PDD) in this quarter, Cat is not sure whether the stock price can successfully make up for the gap.
Therefore, Cat believes that it is safer to choose the price range of 75-80 to build a bullish spread strategy combination.
As long as the stock price of Pinduoduo (PDD) remains above 76.54 before maturity, there is no loss. The profit-loss ratio of this transaction is 1:2.25.
The above trading ideas are for reference only and do not constitute any investment advice, nor do they bear any legal responsibility for any losses caused by direct or indirect reference to this article.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
BABA won't shoot up because of some chart pattern. It needs to solve real problems. But, be patient, a company earning this much money, have time to sort things out.
PDD will continue to do well and enjoy a very healthy upward growth rate as long as it agrees to abide by the finance standards set by the Public Company Accounting Oversight Board (PCAOB).
With China’s ever rising exports and the transition away from USD in global trade, I expect the Yuan to appreciate by 20-30% over the next 2-3 years. If you own Chinese companies like BABA that means profit growth of 20-30%, even if you assume zero organic growth in business, which is highly unlikely.
What I find interesting is that the regular bearish posters say BABA is not a good investment. What about the trader who buys both puts and calls at given times on the stock? Are they “great” to the bearish people here for buying puts and then jag offs when the trader buys calls for move to the upside? If that’s the case I’d like the regular bearish posters to verify this so I can quickly mute since no point in conversation.
I am rosy on the Chinese tech gaint Baba and Tencent. The Chinese governmemt has already has key people in the key regulatory and money grapping positions. This is why Baba can IPOs its subsidairies again. Do you know that the whole Chinese electronic payment system is essentially divideded by Alipay , Wechatplay, and external countries e payment by Paypal? My friend told me that you cannot and hard to buy stuff with real cash, or even western Visa cards. Alipay Oligopoly alreasy worth the current stock price.