Billionaire Lei Zhang’s 10 Stock Picks with Huge Upside Potential

3. PDD Holdings Inc. (NASDAQ:PDD)

Hillhouse Capital’s stake: $264,809,372

Upside Potential: 39.33%

Number of Hedge Fund Holders: 85

PDD Holdings Inc. (NASDAQ:PDD) is a global commerce group that operates platforms like Pinduoduo and Temu, aiming to boost digital inclusion and support small businesses. Revenue comes from transactions and online marketing services offered to merchants. Pinduoduo features social-driven shopping and a next-day grocery service, Duo Duo Grocery. Temu, an e-commerce platform launched in 2022, serves global markets with value-priced goods. Both platforms leverage logistics partnerships and technology to streamline operations and improve customer experiences.

PDD’s Q4 2024 earnings report showed a 24% revenue increase to 110.61 billion yuan, with net profit rising by 18% to 27.45 billion yuan. However, the company reported its slowest quarterly revenue growth since early 2022, attributed to weaker transaction services growth and global challenges. Temu, a discount e-commerce platform owned by PDD Holdings Inc. (NASDAQ:PDD), is facing challenges in the US due to new 145% tariffs on Chinese imports and the removal of the de minimis exemption. These changes have led to increased operational costs and reduced user engagement, with a Morgan Stanley survey indicating a drop in US consumer usage from 27% in September 2023 to 19% in April 2025.

However, according to a report by the Wall Street Journal, Pinduoduo, another platform owned by PDD, announced plans to invest over $13 billion over the next three years to support merchants and enhance its e-commerce ecosystem. This investment aims to bolster merchant operations amid rising challenges, including intensified domestic competition and international geopolitical tensions. Despite all the negatives, the stock is trading at a super-cheap forward PE of 7.38x.