$PDD Holdings (PDD.US)$ The performance will be announced before the Pre-Market Trading on March 20th, Thursday. Institutions expect PDD Holdings to achieve revenue of 115.774 billion yuan in Q4, a year-on-year increase of 30.26%; EPS of 16.89 yuan, a year-on-year increase of 6.7%.

Looking back at the previous quarter's performance, PDD Holdings Q3 revenue grew 44% year-on-year to 99.4 billion yuan, lower than market expectations; the net income attributable to shareholders grew 61% year-on-year to 25 billion yuan, but decreased 22% quarter-on-quarter. Meanwhile, in the Q3 conference call, PDD Holdings co-CEO Zhao Jiazhen stated that due to the limitations of the platform's operation model and the historical experience of the team, the company is expected to significantly face disadvantages compared to peers for some time, and the resulting financial impact may further expand. Affected by the above factors, PDD Holdings' stock price fell more than 10% on the day the Q3 results were announced.

Looking ahead to Q4, the revenue growth rate and profit margin trend of PDD Holdings are key concerns for investors. Additionally, investors should pay attention to information regarding the impact of Trump's tariff policies on Temu.

The revenue from online marketing services and the quarter-on-quarter trend of profit margins are key points of attention.

PDD Holdings' transaction service revenue primarily includes domestic commissions and overseas income from Temu. JPMorgan believes this revenue will slow down, but due to limited information disclosure, attention should be focused on the online marketing service revenue representing the level of domestic GMV growth. The bank's channel survey indicates that in Q4 2024, PDD Holdings' domestic GMV will grow over 20% year-on-year, thus the reasonable year-on-year increase in online marketing service revenue should be 20%-24% (with a year-on-year growth of 24% in Q3 2024).

Furthermore, the company started taking measures last summer to reduce monetization of merchants, resulting in a 9 percentage point quarter-on-quarter decrease in adjusted operating margin to 27% in Q3 2024. JPMorgan believes that due to the continued reduction of monetization levels, the market expects a low probability of improving profit margins in Q4, therefore, an increase in operating margin/net margin quarter-on-quarter may be considered a significant unexpected bullish factor and support valuation adjustments. Although margins are expected to decline slightly quarter-on-quarter (the market expects a 3 percentage point decrease in adjusted net margin for Q4), JPMorgan believes a more significant margin decline (e.g., over 5 percentage points) could be a negative factor and lead to a downward adjustment in earnings forecasts for 2025.

Focus on the relevant guidance regarding the impact of Trump's tariff policies on Temu.

On February 4th, President Trump of the USA announced the implementation of a 10% tariff on Chinese commodities while canceling the tax exemption policy for small packages. Although three days after the decree was implemented, due to the backlog of packages from China that US Customs could not process, Trump announced the suspension of the policy imposing taxes on small packages from China. However, Trump's inconsistency has clearly indicated that the policy's "hammer" may strike again at any time.

According to calculations by CITIC SEC, if the US government cancels the exemption policy for small packages from China and adds a new 10% tariff on Chinese goods, a product originally priced at $40 on Temu will increase in price by 1/4, reaching around $50. Similarly priced products on Amazon will rise from $67 to $69. In other words, although the price increase on Temu will be larger, for the same product, the price on Temu will still be significantly lower than on Amazon.

Overall, investors should pay attention to the company's guidance regarding Trump's tariff policy on Temu and whether there will be corresponding strategies for future operations.

How did the stock price perform on earnings report days?

Currently, the implied volatility of PDD Holdings is ±9.45%, indicating that the options market is betting on a one-day price fluctuation of 9.45% after the Earnings Reports; in comparison, the average stock price fluctuation of PDD Holdings in the last four quarters after the Earnings Reports was ±10.9%, showing that the current options value of this stock is undervalued.

In the past 12 performance release days, PDD Holdings has had a higher probability of good stock price performance, with 9 out of 12 instances closing higher, and the average return on stock price on performance release days was ±13.3%. However, regarding the direction of this post-performance price movement, the skewness of the options volatility data shows that the market is slightly inclined to be somewhat bearish this time.

PDD Holdings 2024 Q4 and annual performance live broadcast.

Mar 20 11:30

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Editor/Jeffy