Note: This Daily Note is made public as one of our top long-term ideas soars 20%. Thank you to Interactive Brokers for partnering with my content. Make sure to share my work with others as we enter a more contested 2024. Stock-selection will have serious value to complement passive Buy & Hold in 2024.
Hey Folks -
Let’s talk about Pinduoduo (PDD) - a top long term idea shared inside our Community since ~80/share and a personal holding of mine in my retirement accounts. We’ll discuss their latest quarter here with synthesized commentary from the Sell Side.
PDD Holdings, the parent company of the Chinese online discount retailer Pinduoduo and the cross-border platform Temu, reported a significant increase in its third-quarter revenue, surpassing analysts' forecasts. The company's revenue jumped by 94% year-on-year to 68.84 billion yuan (approximately $9.62 billion), driven mainly by the success of Temu, its overseas e-commerce segment. Temu, which was launched just a year ago, has rapidly expanded its presence to 48 countries, including in Europe, the Middle East, South East Asia, and Australia. The platform has become popular for its heavily discounted products and is expected to generate over $16 billion in revenue this year.
PDD's growth has been attributed to its aggressive discounting strategy and marketing efforts, which have helped it gain a significant market share in the competitive e-commerce space. This strategy has not only boosted sales but also increased the company's net income, which rose to 15.54 billion yuan in the third quarter from 10.59 billion yuan a year earlier. Despite the economic uncertainties and the cost of living crisis in many countries, PDD Holdings has managed to attract value-conscious consumers, outperforming rivals like Alibaba and JD.com.
My thinking is that PDD’s long-term story is getting stronger. Short-term, the stock is now overbought after another ginormous rally post-earnings.
Going forward, I will continue to do my best to find long-term ideas such as this to share with members. Join our Community to support our work in searching for alpha in this market.
Positioning Guidance:
Will continue to monitor for more opportunities. I expect lots of opportunities to come back in the coming weeks. All we need to do now is stay patient.
Forward-looking Conclusions of this note:
Macro: Range compression eventually leads to range expansion. I’m waiting on the sidelines to see what happens next. Hedging is appropriate only if the conditions are met in our 11/27 Daily Mkt Note.
Stock-Specific: Previously shared at 155, Walmart continues to stabilize up to 158.5-159. Lift stops up, and turn this into a risk-free trade.
Bonds: Bonds are a top 2024 idea for Wall Street according to the latest Fund Manager Survey, indicating that the Street is ready for a Hard Landing.
China: Long-term top idea Pinduoduo soars as TEMU continues to gain market share. Long term story intact. Short-term overbought. Not a reason to worry for long term investors.
I will do my best to keep you as updated on my research, ideas, and setups. I cannot take any 1:1 questions related to individual positioning or guide on individual transactions.
My work here is solely an expression of my personal journaling, but must not be treated as formal financial advice.
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