PDD stock price jumped above a key resistance level as investors waited for its results on Monday. It jumped to a high of $127, its highest level since March 24, and 45% above its lowest point in 2024. This article provides a forecast for the stock before earnings.
PDD Holdings to publish earnings
The primary catalyst for the PDD Holdings stock price will be its earnings, which are expected to be released on Monday. These results will reflect the impact of the intense competition in China and the fact that it has slowed its marketing spending on its Temu brand.
Recent media reports have highlighted significant concerns about Temu, including the slowing sales in the United States after the end of de minimis, which allowed sellers send products to the United States without paying any taxes.
At the same time, the company has faced major challenges as it competes with Amazon, which introduced a similar product. Temu has also faced issues in Europe, where it was accused of failing to prevent sales of illegal products.
The most recent results showed that PDD’s revenues rose by 10% in the first quarter to $13.1 billion. However, its strong spending pushed its operating and net profits much lower.
The operating profit slumped by 38%, while the net income fell by 47% to $2 billion. Lei Chen, the CEO said this about its profits:
“These investments weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform.”
The CFO warned that the slowdown may continue because of the external environment factors, saying:
“Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times.”
Data compiled by Yahoo Finance shows that the company’s revenue is expected to be CNY 103.2 billion, a 6.3% increase from the same period last year. However, its earnings per share (EPS) will be CNY 14.8, down from CNY 23.24 in the same period last year.
The benefit for the PDD stock price is that the earnings report could be better than expected now that expectations are low.
PDD Holdings stock price analysis
The daily chart shows that the PDD stock price formed a double-bottom pattern at $87.56 in August last year and April this year. A double-bottom pattern is one of the most common bullish patterns in technical analysis.
The stock has moved above the upper side of the symmetrical triangle pattern. It has also formed a golden cross pattern as the 50-day and 200-day moving averages crossed each other.
However, the stock has formed a doji candle, pointing to a potential reversal after earnings. Such a reversal may see it retest the important support at $120.
Read more: Alibaba stock price forecast ahead of earnings
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