2024-05-22 16:05:56 ET
Summary
- PDD Holdings Inc. just released its first quarter earnings.
- The release showed 131% revenue growth and 202% earnings growth, both well ahead of expectations.
- PDD Holdings' previous earnings release beat expectations, but the stock still crashed. The trading after today's release was lukewarm.
- Some factors in PDD Holdings' release, such as cash flows, suggest that the company's earnings quality and sustainability might not be great.
- In this article, I explore why I remain bullish on PDD Holdings ahead of earnings, and why I am downgrading my rating to "buy" despite my continued bullishness.
PDD Holdings Inc. ( PDD ) just released its earnings for the first quarter. The release showed a 131% increase in revenue and a 202% increase in adjusted EPS. Both figures exceeded analysts' expectations by wide margins. The EPS growth in particular was nearly double what analysts expected. The stock, however, achieved just minor gains after the release came out. As I will show in a later paragraph, the tepid reaction to all of this explosive growth was not necessarily irrational, as there was plausible cause to question the earnings figure reported....
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PDD Holdings' Q1 Earnings: Great - With 1 Catch (Rating Downgrade)