JD vs. PDD: Which Chinese E-Commerce Stock is the Better Buy?

Core Insights - JD.com and PDD Holdings are two major players in China's e-commerce sector, each pursuing different growth strategies while competing for investor interest [1][2] - JD.com focuses on a capital-intensive logistics infrastructure, while PDD Holdings utilizes a social commerce model and international expansion through Temu [1][2] JD.com Analysis - JD.com reported a 22.4% year-over-year revenue growth in Q2 2025, reaching RMB356.7 billion, but faced margin compression with net income declining to RMB6.2 billion from RMB12.6 billion year-over-year [3][4] - The company employs over 900,000 people and plans to recruit an additional 35,000, emphasizing long-term infrastructure development [3] - JD.com has invested over RMB1 billion in robotics startups and launched an AI-powered supply chain platform managing over 57 million SKUs [4] - Fulfillment expenses are 6.5% of revenues, and the company repurchased $1.5 billion worth of shares in H1 2025 under a $5 billion program [4] - The consensus estimate for JD.com's 2025 earnings is $2.68 per share, indicating a 37.09% decline from 2024 [5] PDD Holdings Analysis - PDD Holdings achieved RMB103.98 billion in revenue for Q2 2025, reflecting a 7% year-over-year growth, attributed to strategic investments rather than weakness [6] - The company has launched a RMB100 billion merchant support program to prioritize small and medium-sized merchants, positioning itself for market share growth [6] - PDD's international expansion through Temu is rapidly establishing it in Western markets, leveraging China's manufacturing advantages [7][8] - PDD maintains strong financial flexibility with RMB365 billion in cash reserves against RMB11.3 billion in debt, allowing for sustained investment [8] - The Zacks Consensus Estimate for PDD's 2025 earnings is $9.62 per share, indicating a 15.02% year-over-year decline [9] Valuation and Performance Comparison - JD.com trades at a forward P/E of 10.53x, significantly below the industry average of 25.51x, while PDD Holdings has a trailing P/E of 11.87x, justified by its growth trajectory [10][13] - Year-to-date performance shows PDD shares gained 38.4%, while JD stock returned only 1.7%, indicating market preference for PDD's growth narrative [13][16] Conclusion - PDD Holdings is positioned as the superior investment opportunity due to its innovative social commerce model, international expansion, and minimal debt [15][16] - JD.com faces challenges with margin compression and cash burn from unprofitable ventures, making it less attractive for immediate investment [16]