6. PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders as of Q4: 85
SRS Investment Management’s Equity Stake: $394.20 Million
PDD Holdings Inc. (NASDAQ:PDD), a parent company of Pinduoduo and Temu, reported a strong financial performance for the fourth quarter of 2024, though results were mixed compared to market expectations. The company posted earnings per share (EPS) of 20.15 RMB, exceeding the forecasted 19.84 RMB, but revenue fell short at 110.6 billion RMB, missing the expected 115.15 billion RMB. Despite this, it remains committed to long-term growth over short-term financial targets, with a strategic focus on enhancing its merchant ecosystem, expanding logistics support in remote areas, and improving product quality. Following the earnings release, the stock declined by 3.44% in premarket trading, reflecting investor concerns over the revenue miss.
For the full year 2024, PDD Holdings Inc. (NASDAQ:PDD) reported a remarkable 59% year-over-year increase in revenue, reaching 393.8 billion RMB. The company’s strong fundamentals were highlighted by an industry-leading gross profit margin of 62.06% and significant cash reserves of 331.6 billion RMB as of December 31, 2024. In the fourth quarter alone, revenue grew by 24% year-over-year, supported by an operating profit of 28 billion RMB, maintaining a solid 24% margin. With a full-year net income of 122.3 billion RMB, PDD remains well-positioned to navigate the evolving e-commerce landscape while continuing to invest in its platform and expansion initiatives.
PDD Holdings Inc. (NASDAQ:PDD)’s focus extends beyond financial performance as it prioritizes ecosystem development and merchant support. Moving forward, the company is expected to leverage its vast resources to enhance logistical efficiency, optimize merchant engagement, and expand internationally. With a solid financial foundation and a clear strategic direction, PDD Holdings remains a formidable player in the global e-commerce industry. As SRS Investment Management holds a stake of over $394 million in the company, it is sixth on the list of top stocks to buy according to the hedge fund.
GreenWood Investors stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2024 investor letter:
“Aside from transitory foreign exchange translation losses (as opposed to trading losses), the two other notable detractors from our portfolio were MEI Pharma and PDD Holdings Inc. (NASDAQ:PDD) in 2024.
PDD Holdings founder Colin Huang is who inspired us to “run 3x faster,” as the relentless corporate culture of PDD has built an e-commerce company with roughly the same GMV (gross merchandise value) of Amazon in one-third the time it took Amazon to build itself. Shares reacted negatively when the company decided to reinvest its record margins into even faster growth and creating a healthier supplier ecosystem. As it looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple.
PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices. We would not want to compete with the demanding corporate culture of PDD and Temu. Its operating model is relentless at identifying efficiency throughout the manufacturing and selling supply chain. Not only is it a mor formidable competitor than Amazon, and growing much faster, but the valuation is 4x more attractive than Amazon’s…” (Click here to read the full text)
