Is PDD a good stock to buy? We came across a bullish thesis on PDD Holdings Inc. on r/ValueInvesting by Murky_Obligation_677. In this article, we will summarize the bulls’ thesis on PDD. PDD Holdings Inc.’s share was trading at $96.64 as of May 26th. PDD’s trailing and forward P/E were 9.74 and 7.69 respectively according to Yahoo Finance.
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PDD Holdings Inc., a multinational commerce group that owns and operates a portfolio of businesses. PDD is portrayed as a rapidly scaling e-commerce platform that is taking share in China and expanding globally through Temu. The investment case centers on its demand aggregation model, which connects consumers directly with manufacturers, eliminating intermediaries and reducing inventory risk while improving price discovery. This allowed it to gain share from Alibaba and JD in a previously mature market.
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Its winner-takes-all dynamics stem from strong network effects that enhance scale, liquidity, and monetization efficiency. Temu is a key global growth driver and is already among the most downloaded shopping apps worldwide. The business generates strong cash flow through negative working capital as users and merchants pay upfront. Despite heavy investment in acquisition and logistics, PDD remains net cash positive. Valuation shows a $145 billion market cap implying a $75 billion enterprise value after cash, against $17–20 billion normalized EBIT depending on marketing capitalization assumptions.
This implies a deeply discounted multiple for a high-return business exceeding 50% ROIC. Even under conservative assumptions, PDD remains undervalued with Temu providing additional upside optionality. Risks include China exposure and regulatory uncertainty, though long-term fundamentals remain favorable.
The platform’s scale advantage compounds over time as more liquidity improves ad targeting efficiency and lowers customer acquisition costs, reinforcing long-term dominance. Management is still in reinvestment mode, prioritizing growth over buybacks as the ecosystem continues to scale. Overall upside is driven by rerating, Temu monetization, and normalization of earnings power, creating potential for meaningful rerating over time as scale accelerates globally further.
Previously, we covered a bullish thesis on PDD Holdings Inc. (PDD) by Favona Hathaway in May 2025, which highlighted strong growth, C2M model, Temu expansion, and long-term upside. PDD’s stock price has depreciated by approximately 1.26% since our coverage. Murky_Obligation_677 shares a similar view but emphasizes valuation compression, cash flow strength, and Temu-driven global scaling potential despite ongoing reinvestment-led margin pressure.
PDD Holdings Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held PDD at the end of the first quarter which was 67 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.
