PDD Should I Buy
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PDD Holdings Inc is not a strong buy for a long-term beginner investor at this moment. While the stock has a relatively cheap valuation and some positive analyst sentiment, the missed earnings expectations, declining profitability metrics, and ongoing regulatory concerns in China make it a less attractive option. Additionally, technical indicators and trading signals do not suggest a strong entry point currently.
The MACD is positive and expanding, indicating slight bullish momentum. However, the RSI is neutral at 51.409, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key resistance levels are at 105.79 and 108.688, while support levels are at 96.408 and 93.51. The stock is trading near its pivot point of 101.099, suggesting a lack of strong directional momentum.
Nomura upgraded the stock to Buy due to its cheap valuation, trading at 8.6x expected 2026 earnings, and its strong cash position. The company has shown resilience in adapting to U.S. tariffs and regulatory changes.
The company missed Q4 earnings expectations, with revenue and EPS declining YoY. Analysts have flagged concerns about slowing domestic retail sales, higher expenses, and potential regulatory investigations in China. Technical indicators and trading signals do not suggest strong upward momentum.
In Q4 2025, revenue increased by 12.03% YoY to 123.91 billion CNY. However, net income dropped by 10.59% YoY to 24.54 billion CNY, and EPS decreased by 10.80% YoY to 4.13. Gross margin also declined by 2.29% YoY to 55.49%, reflecting profitability pressures.
Analyst sentiment is mixed. Nomura upgraded the stock to Buy with a $136 price target, citing cheap valuation. However, Citi lowered its price target to $142 from $170, citing slowing domestic retail sales and higher expenses. Regulatory concerns in China remain a significant risk.
