Is PDD a good stock to buy? We came across a bullish thesis on PDD Holdings Inc. on Chop Wood, Carry Water Investment Journal’s Substack by Alexandru Dragut. In this article, we will summarize the bulls’ thesis on PDD. PDD Holdings Inc.’s share was trading at $104.20 as of April 20th. PDD’s trailing and forward P/E were 10.60 and 8.55 respectively according to Yahoo Finance.
PDD Holdings is a high-ROIC e-commerce platform operating two distinct engines: Pinduoduo, a domestic social group-buying platform connecting price-sensitive Chinese consumers directly to manufacturers and farmers, and Temu, an international marketplace sourcing from China to serve 80+ countries.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
Pinduoduo’s domestic business is highly profitable, benefiting from a cost-efficient consumer-to-manufacturer model, deep agricultural supply chain integration, strong social network effects, and embedded customer loyalty across 880+ million active buyers.
It generates revenue through marketing and transaction fees with minimal capital requirements, producing ROIC exceeding 70%, operating margins of 25–27%, and robust free cash flow, while accumulating a net cash position of nearly $59.5 billion. Temu powered extraordinary international growth from 2022–2024, but geopolitical developments—U.S. de minimis elimination, high tariffs, and EU regulatory pressures—have disrupted the model, introducing nearly unquantifiable risk that complicates valuation.
Despite Temu’s challenges, Pinduoduo’s core business remains structurally strong, with revenue and profitability continuing to expand, merchant loyalty programs deepening operational moats, and agricultural data assets creating near-irreproducible advantages. The company’s domestic performance underpins a compelling risk-adjusted investment case, with the current market price implying near-zero real growth for one of the world’s highest-ROIC businesses. Optionality in Temu’s international expansion exists but is binary and difficult to model.
Insider alignment is high, with 31% ownership by founder Colin Huang and 49% insider participation, and management demonstrates long-term discipline, prioritizing platform investment and ecosystem development over quarterly optics. In summary, PDD combines a dominant, cash-generative domestic engine with high optionality international exposure, presenting a rare combination of quality, cheap valuation, and geopolitical uncertainty that defines both the opportunity and risk for investors.
Previously, we covered a bullish thesis on PDD Holdings Inc. (PDD) by LongYield in May 2025, which highlighted strong top-line growth, strategic reinvestment into marketing and R&D, and ecosystem expansion via Temu. PDD’s stock price has appreciated by approximately 6.45% since our coverage. Alexandru Dragut shares a similar view but emphasizes Pinduoduo’s high-ROIC domestic engine and Temu’s geopolitical risks.
PDD Holdings Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held PDD at the end of the fourth quarter which was 73 in the previous quarter. While we acknowledge the risk and potential of PDD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PDD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
