Pinduoduo (PDD) 2024 Valuation Model and Risk Framework

Pinduoduo (PDD): Valuation and Outlook
 
This Pinduoduo (PDD) valuation model includes a detailed operating model with valuation, historical financials, projections, and segment build. Assumptions can easily be adjusted by the user.
 
Once you have downloaded the model, e-mail us for the associated memo for 2024.
 
The memo includes insight into last quarter's earnings and 2024/2025 outlook:
- Company beat on topline and bottom line
- One of the fastest growing e-commerce stories globally (Temu)
- Very cheap on revenue, EBITDA, free cash flow, and earnings
- Mgmt working diligently to reduce US Temu exposure to 30%
- Risk from new tariffs/embargoes until Trump Presidency
 
Earnings: Last Wednesday, PDD Holdings Inc. put out its Q4 earnings, beating EPS estimates by 45%. Revenue grew 123% and earnings grew 146%. However, the stock dropped 7.2% after the release came out, which could have been due to various reasons, including shorts anticipating additional tariffs from the Trump administration.
Revenue came in at $12.35 billion, up 123%, a beat by $1.5 billion. 
PDD's OMS revenue rose 57% yoy, implying above-industry GMV growth and take rate improvement
Estimate its domestic GMV grew 24% yoy vs. NBS online retail sales of goods +7.3% yoy
Transaction services revenue rose 357% yoy, likely driven by strong momentum in GMV growth
Per Sensortower, Temu's average MAU in 4Q23 grew 31% qoq to 140mn, and accumulated downloads were 335mn
Earnings per share (“EPS”) came in at $2.41, up 146% and a beat by $0.75. 
Earnings were a full 46% ahead of what analysts had been expecting…
Outlook
For PDD's domestic business, strong OMS growth in 4Q23 suggests continued market-share gain (despite market concerns about peers being more aggressive on low prices) and room to further improve take rate into 2024, which should lead to sizable domestic profit to support investments in Temu.
 
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