PDD’s strategic focus on value-driven positioning and the expansion of its Temu marketplace have propelled it to the forefront of China’s e-commerce landscape, analysts noted, resulting in the company becoming the most valuable player in this segment.
Last week, PDD Holdings announced impressive first-quarter results, leading to a surge in its stock price by as much as 7.5% and surpassing Alibaba Group in market capitalization. Over the past year, PDD’s shares have more than doubled in value, increasing by 109%, according to LSEG data.
PDD, which also owns the Chinese discount shopping app Pinduoduo, now boasts a market capitalization of approximately $208 billion, exceeding Alibaba’s $196 billion, as reported by LSEG data. JD.com trails behind with a market capitalization of $48 billion.
Morningstar highlighted optimism regarding Temu’s profitability, anticipating accelerated improvements, particularly with the introduction of the half consignment model where logistics costs are borne by merchants. Analyst Chelsey Tam emphasized PDD’s strong consumer appeal due to its value-oriented approach, placing it ahead of JD.com and Alibaba in consumer preference.
Goldman Sachs upgraded PDD’s rating to “buy” from “neutral,” citing sustained growth momentum in advertising revenue during the first quarter and the promising potential of Temu. Analyst Ronald Keung underscored PDD’s adtech capabilities and advantageous supplier and supply chain dynamics in China.
Despite intense competition, PDD had briefly overtaken Alibaba in market capitalization in the fourth quarter of last year before Alibaba reclaimed the top spot in the first quarter of this year, according to LSEG data.
In its earnings report, PDD revealed a substantial year-over-year surge in net income attributable to ordinary shareholders, soaring by 246% to $3.87 billion (27.99 billion Chinese yuan) in the March quarter, well above analyst estimates.
The company also reported a significant increase in revenue from transaction services, totaling $6.14 billion, reflecting a 327% rise compared to the same period last year. PDD attributed these strong results to proactive responses to consumption promotion policies and strategic seasonal promotional activities.
Looking ahead, PDD expressed confidence in the Chinese consumer market, contrasting with Alibaba’s substantial decline in net income attributable to ordinary shareholders during the same quarter.
Alibaba, which owns prominent e-commerce platforms like Ali Express, Alibaba.com, Taobao, and Tmall, saw its net income drop by 86% year-over-year to 3.3 billion yuan in the March quarter.
