PDD (Nasdaq: PDD) stock price continued its strong bullish trend this week after the company published strong financial results. The stock surged to a high of $138.40, the highest point since June 1st. It has risen by more than 490% from the lowest level this year.
Temu is thriving
Pinduoduo is one of the biggest e-commerce companies in the world. It has millions of customers, mostly in China. Recently, the company has been pushing Temu, its highly popular e-commerce platform.In a statement, the company said that its total revenue rose by 94% YoY to over $9.4 billion. The strong revenue growth was because of weak comparables since China was in a lockdown mode in 2022. Its operating profits jumped by 60% to $2.28 billion while its net income jumped to over $2.1 billion. The company attributed this growth to its innovation, growing market share, and improved supply chains. By segment, PDD Holdings said that its online marketing services revenues rose by 39% to $5.4 billion. Transaction revenue jumped by 315% to almost $4 billion. These results mean that the company is doing well.Internationally, PDD Holdings growth is being driven by Temu, which has been growing at a fast pace. The most recent data shows that the number of American customers grew from 5.8 million in October 2022 to over 104.2 million.Temu is investing heavily in marketing in a bid to boost its market share. In its last quarter, PDD Holdings spent over $2.8 billion, a 55% increase from the same quarter in 2022. The goal for now is not profitability but to gain market share in a highly competitive market.The biggest risk for Temu is that profitability could take longer than expected. A good example of this is ContextLogic, the parent company of Wish.com. After showing spectacular revenue growth a few years ago, its revenue has slipped to just $357 million in TTM. Its net loss also jumped to over $359 million.
PDD stock price forecast
PDD chart by TradingViewThe weekly chart shows that the PDD Holdings stock price has done as I predicted a few weeks ago. It has flipped the important resistance point at $106.77 (January 23rd high) into a support level. This price was the upper side of the ascending triangle pattern.The shares moved above the 50-week moving average. At the same time, the shares are trading at the 38.2% Fibonacci Retracement level. Therefore, the outlook for the stock is still bullish, with the next point to watch being at $166, the 23.6% retracement point.More By This Author:The bullish Case For The Ishares Silver Trust ETFSEC Still Probing Binance US Over FTX-Like Fraud Bernstein Says This Chinese EV Maker Should Be Worth Close To Tesla
