The fallout continued for PDD Holdings (PDD 4.31%) on Wednesday. One day after reporting earnings that disappointed many investors, the Chinese e-commerce giant's American Depositary Shares (ADSes) took a hit, falling by more than 1% that trading session. That wasn't surprising, considering that an analyst downgraded his recommendation on the company.
It's now a hold, says pundit
In this country, PDD is best known as the owner and operator of Temu, an online discount retailer that offers a vast array of items.
Image source: Getty Images.
That makes the company popular among American consumers, but this country's stock pundits are a different story. Wednesday morning one of them, Bernstein SocGen's Robin Zhu, rerated PDD stock as a market perform (hold, in other words), one peg down from his preceding outperform (buy).
In his PDD update, according to reports, Zhu opined that the company's China business is reaching maturity. He pointed to metrics such as daily active users (DAUs) and total time spent on PDD sites as causes for concern; PDD needs to maintain or grow user engagement and the overall "stickiness" of its offerings, in his view.
NASDAQ: PDD
Key Data Points
Difficult dynamics
PDD's third quarter was mixed, as the company topped the consensus analyst estimate for earnings but missed on revenue.
While I think PDD has done a decent job keeping Temu popular with American shoppers, it's forever operating in a highly competitive landscape in this country. Meanwhile, its Chinese operations aren't looking so hot these days, and the country's economy is unlikely to return to the high-growth years of the past anytime soon. This isn't a dynamic conducive to PDD's growth prospects.
