Analysts noted that PDD’s emphasis on value-for-money and the growth of its Temu marketplace have propelled the company to the forefront of China’s e-commerce space, securing its position as the country’s most valuable player in this segment.
PDD Holdings reported robust first-quarter results last week, driving its shares up by as much as 7.5% and surpassing rival Alibaba Group in market capitalization. Over the past year, PDD shares have surged by 109%, according to LSEG data.
With a market capitalization of approximately $208 billion, PDD, which also owns the Chinese discount shopping app Pinduoduo, has eclipsed Alibaba’s $196 billion, according to LSEG data. JD.com trails as a distant third with a market capitalization of $48 billion.
Morningstar analysts expressed optimism about Temu’s profitability, anticipating faster improvement due to the introduction of the half consignment model, which shifts logistics costs to merchants. They highlighted PDD’s strong consumer perception of value-for-money, ranking it as the top preference, followed by JD.com and Alibaba.
Goldman Sachs upgraded PDD’s rating to “buy,” citing the firm’s continued growth momentum in advertising revenue and Temu’s potential. The market has now accounted for previous concerns about domestic competition and U.S.-China tensions, the bank noted.
PDD’s net income attributable to ordinary shareholders in the March quarter surged by 246% to $3.87 billion, surpassing estimates. Revenue from transaction services soared by 327% to $6.14 billion.
Alibaba, in contrast, experienced an 86% plunge in net income attributable to ordinary shareholders in the March quarter. The company owns e-commerce platforms like AliExpress, Alibaba.com, Taobao, and Tmall.
PDD’s overseas expansion gained momentum with Temu, especially after a Super Bowl ad in 2023. Temu’s popularity has extended to the U.S. and other countries like Australia, New Zealand, and several European nations.
BofA highlighted Temu as relatively better placed among competitors like TikTok and AliExpress, leveraging the expertise of its parent and sister companies.
