PDD Holdings Inc. (NASDAQ: PDD) released its fourth-quarter 2024 earnings report, showcasing a mixed performance. The company exceeded analysts’ expectations for earnings per share (EPS) but fell short on revenue forecasts. Despite the positive earnings surprise, PDD’s stock fell 3.44% in premarket trading, indicating investor disappointment with the revenue miss.
Earnings Beat but Revenue Miss
In Q4 2024, PDD reported an EPS of 20.15 RMB, surpassing the anticipated 19.84 RMB. This positive surprise highlights the company’s robust profitability and cost efficiency. However, revenue came in at 110.6 billion RMB, missing the consensus estimate of 115.15 billion RMB, marking a 3.95% shortfall.
The company emphasized its commitment to long-term growth and ecosystem investment over short-term revenue targets, which may have contributed to the mixed market reaction.
Financial Highlights
- Q4 2024 Revenue: 110.6 billion RMB (+24% YoY)
- Full-Year 2024 Revenue: 393.8 billion RMB (+59% YoY)
- Q4 Non-GAAP Operating Profit: 28 billion RMB, with a 24% margin
- Full-Year Non-GAAP Net Income: 122.3 billion RMB
- Cash and Equivalents: 331.6 billion RMB as of December 31, 2024
Strong Financial Position and Profitability
PDD’s financials reflect industry-leading gross profit margins of 62.06% and strong cash flow generation, far exceeding its debt obligations. This solid foundation enables the company to invest heavily in expanding its merchant ecosystem and strengthening its logistics network, particularly in remote and agricultural regions.
Stock Reaction and Valuation
Following the earnings announcement, PDD shares dropped 3.44% in premarket trading to $121.59, reflecting disappointment over the revenue miss. The stock remains below its 52-week high of $164.69, but well above the low of $88.01.
Despite the dip, InvestingPro’s fair value analysis suggests PDD remains undervalued, with a strong “EXCELLENT” financial health rating. The company’s current P/E ratio of 10.24 indicates attractive valuation levels relative to its growth potential.
Strategic Expansion and Market Position
PDD continues to focus on global expansion and product quality, enhancing its merchant support services and scaling logistics in underserved regions. This strategy is designed to drive long-term revenue growth, even if it temporarily affects short-term financial performance.
Key Takeaway
While PDD’s revenue miss triggered a short-term sell-off, its solid profitability, strong cash flow, and long-term growth strategies position it as a compelling e-commerce player. With a relatively low P/E ratio and robust financials, PDD remains an attractive stock for growth-focused investors.
