Pinduoduo Inc.

Pinduoduo Inc. (NASDAQ - PDD) operates as an e-commerce platform. Pinduoduo, a mobile e-commerce platform, is available. The platform of the company offers low-cost items and interactive purchasing alternatives. The site is designed to seem like a virtual bazaar with a wide range of items. It allows you to buy as an individual or as a group.

Key Highlight

• GMV was RMB2,441.0 billion (USD 2838.0 billion) in the year ending December 31, 2021, up 46% from RMB1,667.6 billion in the twelve-month period ended December 31, 2020. (GMV refers to the total value of all orders for products and services placed on the Pinduoduo mobile platform, regardless of whether the products and services are actually sold, delivered or returned.)
• The quarter's total revenues were RMB27,230.9 million (USD 24,273.1 million), up 3% from RMB 26,547.7 million in the same quarter of 2020. Operating activities generated RMB16,399.8 million (USD 2,573.5 million) in net cash, up from RMB14,946.6 million in the same quarter of 2020.
• The quarter's average monthly active users were 733.4 million, up 2% from 719.9 million in the same quarter of 2020. The number of active buyers in the year ending December 31, 2021, was 868.7 million, up 10% from 733.4 million YoY.
• Annual spending per active buyer was RMB2,810.0 (USD 441.0) in the year ending December 31, 2021, up 33% from RMB2,115.2 in the previous year.
• As of December 31, 2021, cash, cash equivalents, and short-term investments were RMB92.9 billion (USD 14.6 billion), up from RMB87.0 billion as of December 31, 2020.
• Price of PDD stock is moving in a downward channel as shown in the graph below. PDD made an all-time high (USD 212.60) in February last year and has corrected 82.40% since then. Currently, PDD is on the upper side of the downward channel with high chances of breaking it upwards. Once, the price breaks upside, an entry can be taken on the retest.
• Also, rising COVID-19 cases in China have stoked fears in the market for US-Listed Chinese stocks, as supply chain could get disrupt on the wake of strong lockdown measures announced by the government.

One-year Technical Price Chart (as of April 28, 2022, 11:05 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Stock recommendation

The current price of PDD as of 28 April 2022 at 11:05 am PDT, is USD 37.49, which is trading near the upper long-term trend line. Once this trend line will be broken, we expect the volume to return to this stock and will give a good breakout profit.  Simultaneously, good fundamentals support the probability of an upward breakout. However, stock could also take resistance near the downward sloping trend line. Also, amid rising COVID-19 cases in China, supply chain related risk could keep US-listed Chinese stocks quite volatile. Therefore, we recommend a "Watch" rating on the stock at the current price of USD 37.49 up 0.58% as of April 28, 2022, at 11:05 AM PDT, with a further evaluation in case of a breakout.

Technical Analysis Summary

* Current price as of April 28, 2022, at 11:05 AM PDT

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.