Why PDD Holdings Stock Plunged Today

Core Viewpoint - PDD Holdings reported disappointing revenue growth in Q2, leading to a significant drop in share price, despite impressive earnings figures [1][2][3]. Group 1: Financial Performance - Revenue for Q2 increased by 86% to $13.4 billion, but fell short of analyst expectations of $14.04 billion [2]. - Adjusted operating profit surged by 139% to $4.48 billion, with improved gross margins and better expense management [2]. - Adjusted earnings per share reached $3.20, up from $1.45 year-over-year, exceeding the consensus estimate of $2.73 [2]. Group 2: Management Commentary - Co-CEO Lei Cehn expressed concerns about future challenges and increased competition, indicating a willingness to accept short-term sacrifices and potential declines in profitability [3]. - Management did not provide specific guidance for the upcoming quarters, but indicated expectations of intensified competitive pressure affecting revenue growth [4]. Group 3: Market Reaction and Valuation - Following the earnings report, PDD's shares fell by approximately 28% [1]. - The current price-to-earnings ratio is below 10, suggesting a low valuation for a rapidly growing company, reflecting investor caution regarding the Chinese market [4].