To The Moon

Something to take note of as $PDD Holdings Inc(PDD)$ announces earnings.

In the past 5 earnings reports, PDD beat expectations and the stock had an intraday gain as high as the following amounts:

1Q23: 19.1%

2Q23: 19.4%

3Q23: 18.9%

4Q23: 16.1%

1Q24: 7.6% (oddly sold off despite huge rev & EPS beats)

That's an average intraday gain of 16.2% when they beat expectations.

The action in PDD post 2Q24 results is having a spillover effect on the rest of the China tech sector. $Alibaba(BABA)$ $Alibaba(09988)$ $JD.com(JD)$ $JD-SW(09618)$ $Bilibili Inc.(BILI)$ $BILIBILI-W(09626)$ all depressed pre-open.

This makes little sense. Pinduoduo's results weren't great but they weren't horrendous by any measure. Management guidance was the killer though. But, again, the magnitude of the declines doesn't make sense.

If I just delivered 86% revenue growth and 120% earnings growth and told you to expect growth like that to be unsustainable and that I'd be investing more to ensure the business can adapt to changing times, would you sell your shares in the company?

Temu is just a small part of PDD's overall business. Their group-buying platform in China is a strong enabler of rural merchants, helping integrate them into the digital economy where they would otherwise be left behind in other countries.

With the trend in China's consumer market for downgrading to adjust to tougher times, PDD appears to be winning over more active buyers.

https://x.com/BrianTycangco/status/1828004536331682012