PDD Holdings' second-quarter results showed EPS slightly ahead of market expectations, while its forecasts for next year were also revised. Analysts have lowered their revenue forecasts, but optimism about the company's long-term earnings power is growing.
PDD Holdings reported its second-quarter results last week, with revenue of CNY112.0 billion and net income per share of CNY18.45, putting EPS slightly ahead of expectations. The share price fell 5.4% over the past week to around $84.69.
Based on the latest results, the consensus forecast from 36 analysts for next year calls for revenue of CNY468.6 billion and EPS of CNY65.69. Before the earnings announcement, forecasts stood at CNY479.6 billion for revenue and CNY63.53 for EPS, indicating a weaker view of revenue but greater confidence in earnings power.
The average price target is largely unchanged at $116, and some believe that the downward revision to revenue forecasts and upward revision to earnings forecasts will have little long-term impact. Although the range remains wide, from the most optimistic forecast of $171 to the most conservative forecast of $85.04, the spread of forecasts is relatively narrow.
Compared with the industry as a whole, revenue is expected to grow at an annual rate of approximately 8.1% through the end of 2026, a markedly different view from the average growth rate of 35% over the past five years. Although PDD's slowing growth has been highlighted, the importance of long-term value creation continues to be emphasized.