Temu’s Owner PDD Buys Its Way To Become China’s Most Valuable E-commerce Firm
After spending years behind global peers, Chinese stocks have entered a bull market this year on the back of rounds of government stimulus. This has greatly benefited PDD Holdings, the parent company of the shopping app Temu. PDD’s stock has risen nearly 40% since March, surpassing Alibaba to become China’s most valuable e-commerce company. But even after surging almost 500% from its 2022 lows, the company still looks cheap, with revenue doubling and earnings tripling in the recent quarter.
- According to Bloomberg, is trading at 13x its projected earnings for the next 12 months — nearly half the valuation of the Nasdaq 100 and the largest discount ever for PDD compared to the index.
- Goldman Sachs analyst Ronald Keung recently upgraded PDD, stating, “China e-commerce is emerging as one of the more undervalued sub-sectors within China.”
Eyes on Temu: Keung notes that geopolitical risks have dragged down the company’s stock. After conquering the wallets of Americans, Temu is making a strong push into Europe. However, the company’s aggressive business practices have landed it on the naughty list of the European Consumer Organization — which filed a complaint, accusing Temu of using “manipulative techniques” to encourage more spending.
