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Why Pinduoduo Shares Are Surging

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Chinese e-commerce platform Pinduoduo (PDD - Free Report) has surged more than 20% over the past few trading sessions after beating Q3 estimates on both the top and bottom lines. It marked the seventh consecutive earnings beat for Pinduoduo, a Zacks Rank #3 (Hold), and the third sales beat over the past four quarters. Given mixed third-quarter retail results, is PDD a buy?

The Chinese internet retailer posted a profit of $1.21/share, which represented a 65.8% surprise versus the $0.73 estimate. Revenues of $4.99 billion in the third quarter also beat estimates.

Chinese stocks have been volatile due to a civil uproar in relation to the country’s stringent COVID policies. Yet analysts are bullish on fourth-quarter estimates, with PDD expected to deliver Q4 YoY EPS growth of 9.78% on 32.76% higher revenues relative to the same quarter last year.

Many Chinese stocks, including PDD, appear to have bottomed earlier in the year, well before the major U.S. indices. PDD has one of the better-looking charts amongst Chinese equities. The stock appears primed to continue its recent move higher.


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