Trevor Scott
Founder & Portfolio Manager of Tidefall Capital Management
PDD Holdings carries governance and geopolitical red flags that its low valuation does not offset. Its founder stepped down and left the board at 41, the company fractured a regulator's hand and kept employees from speaking to regulators, growth slowed from 90% in 2023 to about 10%, it buys back no stock, and US investors face unknown treatment in a war. @fintergirl argues it trades below 4x operating earnings with 60% of its market value backed by cash. x.comÂ
PDD's growing cash pile without any buybacks means it is either a poor capital allocator or the stock isn't cheap enough yet; it can't be both. A quoted post puts its cash at about $60B against a $120B market cap, and most of that balance is unrestricted, not merely customer and merchant float. This isn't just some cash, and unless the numbers are fraudulent, PDD should be buying back stock. x.com x.com x.comÂ
PDD Holdings can no longer grow faster than high single digits and even has typos in its quarterly report. Per @teechongyen, revenue rose 8% and operating profit 7.6%, while net income fell 12% on an "other loss", and the cash flow statement labeled a US dollar column as RMB. x.comÂ
PDD Holdings is too cheap at 5 to 6x earnings ex cash because the market prices a permanent margin collapse, likely as extreme as the old belief in endless growth. Its push into supply chain, first-party and merchant investment may make it bigger but less profitable, and Temu's durability is unproven. Yet this quarter's $15.4B revenue still yielded about $2.8B operating profit, and $77B of cash and investments backs much of its value. If earnings just stabilize, the multiple looks unjustifiable. … Show more
The AI boom keeps capital from rotating into PDD, delaying its rerating. PDD looks cheap enough to buy gradually now, but may have to wait until the AI boom ends to rerate. x.comÂ
PDD's business keeps growing profitably while its cash pile builds, as solid Q2 results show. Revenue rose 8% to RMB 112.4B, led by transaction services up 13%, and operating profit rose 8% to RMB 27.8B. Operating cash flow reached RMB 25.7B, and cash and short-term investments grew to RMB 456.4B from RMB 422.3B at end-2025. Net income fell 12%, and operating expenses rose 13%, mainly on sales and marketing. PDD, along with Meta, is a stock to buy on the dip. x.com x.comÂ
PDD can outperform without innovating because it trades at about 4x EV to free cash flow. That answers @TYCFOR, who questioned the bullish case given little innovation beyond cutting prices by going direct to producers. x.comÂ
PDD Holdings' growing domestic Pinduoduo business keeps funding Temu's global push, and its chart is forming an inverse head-and-shoulders. Q1 revenue grew 11%, China's June retail sales returned to growth above 5%, and the analyst consensus target of about $99 sits well above the price. A daily close above $88.25 would trigger the pattern, with targets of $93.01, $96.05 and $100.97. x.comÂ
