U.S.-listed shares of PDD Holdings surged early Wednesday before PDD stock pared back some its gains in afternoon trades. The Chinese e-commerce company reported fourth-quarter earnings and sales that easily topped expectations, with revenue more than doubling from a year earlier.
For the three months ending Dec. 31, PDD Holdings said it earned an adjusted 15.83 Chinese yuan ($2.23) per share on sales of 88.88 billion yuan ($12.52 billion). On average, analysts were expecting PDD to post earnings of $1.57 per share and sales of $11.05 billion, according to FactSet.
Adjusted earnings per share increased 107% in local currency while revenue increased 123% in local currency.
On the stock market today, PDD stock gained 3.5% to close at 132.17. Shares surged more than 15% in early trading before easing back.
PDD Holdings includes the China-focused e-commerce platform Pinduoduo and international discount retail platform Temu. U.S.-listed PDD shares surged nearly 80% in 2023. But PDD stock is off about 10% since the start of the year, amid concerns about consumer spending in China and regulatory uncertainty from U.S.-China relations.
PDD Stock: Temu Expansion
Overall revenue for PDD Holdings jumped 90% in local currency for its fiscal year 2023, to 247.64 billion yuan ($34.88 billion). About $21.63 billion of that revenue came from offering online marketing services, PDD said, while transaction services drove $13.25 billion in annual sales.
PDD Holdings Co-Chief Executive Jiazhen Zhao said in a news release that the company saw "growing demand driven by encouraging consumer sentiment" in the fourth quarter.
In China, Pinduoduo has challenged incumbents such as Alibaba and JD.com by offering discounted items at a time consumer spending has been sluggish. Both Alibaba and JD said on recent earnings calls that they are now focused on offering discounted sales.
Meanwhile, PDD launched Temu across several countries late in 2022. It has grown rapidly to be seen as a smaller challenger to Amazon for U.S. e-commerce sales.
PDD Holdings does not break out separate results for its Temu subsidiary. On the company's call with analysts, PDD's Co-Chief Executive Chen Lei said its global business is "at a relatively early stage facing many uncertainties and challenges ahead."
Temu's growth has been helped by a marketing push that has included Super Bowl ads and big-spending on Facebook and Instagram, owned by Meta Platforms.
PDD's total operating expenses increased 44% in local currency year over year for the fourth quarter, totaling $4.42 billion. The elevate figure was "primarily due to an increase in sales and marketing expenses," according to the company's news release.
PDD Stock Temporarily Breaks Out
With Wednesday's early move, PDD stock temporarily jumped above a 139.06 buy point from a double-bottom base, according to MarketSurge.
Meanwhile, IBD Stock Checkup places PDD as the second best-performing stock in the retail-internet group, trailing only Amazon. PDD stock has an IBD Composite rating of 98 out of a best-possible 99. The score means PDD stock currently tops 98% of all other stocks in terms of key performance metrics and technical strength.
