PDD's (PDD) Q4 report 'could be the next share price catalyst' - Morgan Stanley

PDD Holdings (NASDAQ: PDD) is set to unveil its fiscal Q4 2023 report on Wednesday and Morgan Stanley analysts believe the results, specifically its online marketing services (OMS) revenue growth, could be the next stock price catalyst.

“We expect OMS to grow 47% YoY in 4Q23, which implies 20% YoY GMV growth, outpacing ecommerce industry growth of 7.3% YoY,” analysts led by Eddy Wang wrote.

“We attribute the expected outperformance to continued market share gains owing to its 'low price' mindshare benefiting from consumers' price sensitiveness against a backdrop of weak consumption,” they added.

PDD closed 4% higher on Monday.

While PDD could see unexpected growth in Gross Merchandise Value (GMV) and revenue from its international platform, Temu, in Q4 2023, this is not anticipated to be the primary catalyst for the stock’s performance during the period, analysts believe.

Their views are based on a recent increase in negative news regarding US lawmakers' demands for a ban on Temu shipments, driven by allegations of forced labor among its suppliers. Moreover, the analysts suggest that there might be higher-than-expected investments in Temu, which could negatively impact the margins for Q4 2023.

By Vahid Karaahmetovic

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