PDD Holdings stock becomes a bargain before earnings: buy or sell?

PDD Holdings stock price remains under pressure this week as traders focus on the upcoming financial results.

Its ADR was trading at $103 on Monday, down by 37% from its highest level in May.

So, will the stock rebound now that it has become a bargain?

PDD Holdings has become a bargain ahead of earnings 

PDD Holdings is a top company in the e-commerce industry.

It is a popular brand in China, where it owns Pinduoduo, a popular social commerce platform.

Internationally, the company is known for Temu, a popular e-commerce company known for selling cheap Chinese products.

PDD Holdings stock has retreated sharply from its highest point in 2024 as it has moved from one crisis to another. 

It faced a major challenge last year when Donald Trump launched his trade war, which ended de minimis, a provision that allowed foreign companies to ship products under $800 to the United States without paying taxes. 

There are also signs that Temu’s growth has stalled, partly because of the end of de minimis and the slash in its marketing spending.

Data compiled by SimilarWeb shows that Temu's traffic dropped by 22% in February to 1.179 billion.

The most recent results showed that PDD Holdings' business continued to slow down in the third quarter.

Its revenue came in at $15.2 billion in the third quarter, up by 9% YoY, with the company pointing to the competitive environment.

On the positive side, the company’s profitability grew in the third quarter as the company slashed its marketing spending.

It made RMB 29 billion in net income, up by 17% from what it made in the same period last year.

Wall Street analysts expect the upcoming results to show that the company’s fourth quarter revenue will be CNY 124 billion, up by 12.9%.

This revenue will bring its annual figure to over CNY 432 billion, up by 9.75%.

On the positive side, the company has become a bargain, especially because of its strong market share and balance sheet.

It ended the last quarter with nearly $60 billion in cash and equivalent, a notable amount for a company with a market capitalisation of over $147 billion.

PDD trades at a forward price-to-earnings (PE) ratio of 9.36, much lower than the sector median of 14.

Its five-year average is 62, meaning that the company has become a significant bargain.

Also, the forward EV-to-EBITDA has moved to 5.87, lower than the sector median of 9.37.

PDD Holdings stock price technical analysis 

PDD share price chart | Source: TradingView 

The weekly chart shows that the PDD share price has slumped in the past few months, moving from a high of $164 in May 2024 to the current $103.

It has dropped below the ascending trendline that connects the lowest swings in May 2022, April 2025, and January 2025.

Moving below that level is a sign that bears have prevailed.

The stock has also formed a head-and-shoulders pattern and is now near the neckline.

It has moved to the Ultimate Support level of the Murrey Math Lines tool.

PDD Holdings has also dropped below the 100-week Exponential Moving Average.

Therefore, the stock will likely continue falling despite its low valuation.

If this happens, the next key target to watch will be at the extremely oversold level of the Murrey Math Lines tool at $88.