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On Wednesday, Bernstein analysts, led by Robin Zhu, adjusted their outlook on Pinduoduo Inc. (NASDAQ:PDD) by reducing the price target to $125 from the previous $160, while still holding an Outperform rating on the company’s shares. According to InvestingPro data, analyst targets currently range from $90 to $180, with the stock trading at an attractive P/E ratio of 10.6x despite its impressive 59% revenue growth. The revision follows Pinduoduo’s first-quarter results, which fell short of both Bernstein’s and the wider market’s expectations, particularly in revenue and profits.
Pinduoduo reported a quarterly revenue of RMB 95.7 billion, which was RMB 6-7 billion lower than anticipated by both Bernstein and consensus estimates. This shortfall was attributed primarily to a lower Gross Merchandise Volume (GMV) from Temu, Pinduoduo’s overseas e-commerce platform. Despite the revenue miss, InvestingPro analysis shows the company maintains excellent financial health with an impressive gross profit margin of 60.92% and strong liquidity, with current assets more than double its short-term obligations. The operating profit of RMB 18.3 billion came in below the expected RMB 27 billion range, due to a combination of the revenue miss and higher sales and marketing expenses, which at RMB 32.8 billion, exceeded projections by about RMB 5 billion.
The company’s Online Marketing Services (OMS) revenue grew by 14.8%, reaching RMB 48.7 billion, against a domestic GMV increase in the 17-18% range. Bernstein’s analysis, informed by discussions with large cross-border merchants, suggests that Temu’s GMV for Q1 was between $13-15 billion, up from approximately $10 billion in the same quarter of the previous year, but still below what had been modeled by analysts and expectations.
The gross margin of Pinduoduo remained relatively stable compared to the fourth quarter, which, according to Bernstein, suggests that the mix of semi-consignment sales on Temu did not significantly change in Q1. This could imply a domestic Transaction (JO:NTUJ) Services revenue rate of around 60 basis points over GMV. Additionally, Pinduoduo’s management attributed the increased marketing spend to matching government incentive programs in the electronics and appliances category.
The financial report also included some unexpected figures, with interest income reported at RMB 223 million and other net income of RMB 3.3 billion. These numbers were notably different from the approximately RMB 5 billion of quarterly interest income Pinduoduo reported in previous quarters. For deeper insights into Pinduoduo’s financial performance and valuation metrics, investors can access comprehensive analysis and over 10 additional ProTips through InvestingPro, which includes detailed Fair Value assessments and expert financial health scoring.
In other recent news, Pinduoduo Inc. reported first-quarter earnings for 2025 that fell short of profit expectations, primarily due to increased investments in merchant support and consumer subsidies. The company’s transaction services revenue grew by only 6% year-over-year, missing projections and leading to a reduction in price targets by several firms. Morgan Stanley (NYSE:MS) adjusted its price target for Pinduoduo to $130 while maintaining an Overweight rating, citing strategic spending as a potential long-term benefit. Similarly, Macquarie reduced its price target to $126, maintaining an Outperform rating, and highlighted challenges faced by Pinduoduo’s Temu platform. Citi also cut its price target to $152, retaining a Buy rating, and noted a significant slowdown in transaction services revenue. Barclays (LON:BARC), however, maintained its Overweight rating with a price target of $158, despite acknowledging revenue shortfalls linked to the Temu platform. Analysts across these firms expressed varying degrees of confidence in Pinduoduo’s strategic initiatives and future growth potential.
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