Pinduoduo Earnings Incoming: Morgan Stanley Sees Long-Term Profit Potential

Insights – On November 21, Chinese e-commerce giant Pinduoduo (PDD) will release its Q3 2024 earnings.

The market widely expects Q3 revenue to reach $14.65 billion, representing a 55.4% year-over-year increase. Earnings per share (EPS) are forecasted at $2.79, up 75.5% year-over-year.

Last quarter, Pinduoduo reported revenue of ¥97.06 billion (approximately $11.34 billion), falling short of market expectations. Management warned that due to intense competition, revenue growth may slow, and profits could fluctuate in the coming quarters, with rebounds possible, but the long-term trend of declining profitability is inevitable.

Management also indicated that they are prepared to sacrifice short-term profits, with no plans for dividends or share buybacks in the coming years.

Following the disappointing earnings report, Pinduoduo’s stock plunged nearly 30%. 

Source: TradingView; Pinduoduo (PDD) Stock Performance

Mixed  Institutional Opinions

The latest 13F filings reveal growing divergence in institutional views on Pinduoduo.

Hillhouse Capital reduced its Pinduoduo holdings by 46% in Q3, almost halving its position and dropping Pinduoduo from its top holding to the third-largest. Similarly, Greenwoods Asset Management trimmed its stake by 13%, although Pinduoduo remains its largest holding.

In contrast, hedge fund titan David Tepper’s Appaloosa fund more than doubled its Pinduoduo position. Duan Yongping’s H&H fund also significantly increased its stake, adding 3.8 million shares, making Pinduoduo its fifth-largest holding.

Morgan Stanley’s latest report maintains an "Overweight" rating for Pinduoduo, with a price target of $150. Morgan Stanley believes Pinduoduo remains the fastest-growing e-commerce company in China and expects this growth to continue driving operational leverage and long-term profitability. The firm estimates Pinduoduo’s 2025 price-to-earnings (P/E) ratio at 13x, higher than Alibaba’s 9x and JD.com’s 7x.

How Will Pinduoduo’s Stock Perform? 

According to TipRanks data, Pinduoduo’s stock has a 67% chance of rising on earnings day, with an average price movement of ±14% over the past 12 quarters.

Source: TipRanks; Pinduoduo Stock Performance Post-Earnings

Wall Street analysts have an average price target of $169 for Pinduoduo over the next year, suggesting the stock has 44% upside potential.

Analysts highlight that, beyond revenue and GMV growth, investors should closely watch the performance of Pinduoduo’s cross-border e-commerce platform, Temu, and management’s forward guidance. Trump’s tariff policies could impact Temu’s revenue. Meanwhile, If management issues weaker-than-expected guidance again, Pinduoduo’s stock could face significant volatility.