Robert Way
Back in May, I wrote that while PDD Holdings (NASDAQ:PDD) looked attractively valued, controversy surrounding the company kept me on the sidelines. More recently I lowered my rating to “Sell” in September given a lack of disclosure of where its growth was coming from, particularly with regards to Temu.
With the U.S. government getting more aggressive towards banning Chinese companies in the U.S., including the House passing a bill to ban TikTok, PDD faces increased risks that its Temu platform could get banned in the U.S. At the same time, the stock trades at a huge premium to other Chinese e-commerce giants, despite a lack of disclosure on how much revenue and growth is coming from Temu. With the company seeing falling gross margins, it appears Temu is becoming a larger part of the company and/or its Pinduoduo platform is being increasingly promotional.
Company Profile
As a reminder, PDD operates the Pinduoduo…
