Pinduoduo (PDD) Stock: Blistering Growth, Outstanding Execution
The stock is undervalued intrinsically and relative to historic multiples at the time of writing. Pinduoduo (NASDAQ:PDD) is an innovative technology company that has pioneered the concept of social team-based shopping (which I will explain more about later). The company has recently reported strong financials for the third quarter of 2022, as it beat both revenue and earnings growth estimates. The company is also poised to continually benefit from the growing middle class in China. Thus, in this post, I'm going to break down its financials and valuation. Let's dive in. PDD Holdings consists of two main businesses: Pinduoduo, a social e-commerce platform; and Temu, an E-commerce marketplace for North American customers. Pinduoduo pioneered the "Team Purchase" method which enables customers to form "teams" and purchase goods directly from suppliers at huge discounts. Its marketing tagline sums this up perfectly "Together, More savings, More fun". As a western consumer, I am surprised to see that a company such as Meta (META) or Amazon (AMZN) hasn't tried to copy this innovative feature. The beauty of a "social commerce" model is it also results in low-cost user acquisition as existing customers will tell their friends to sign up as both sides have an incentive. The company has over 900 million customers and 16 million businesses in its ecosystem.