PDD Stock Faces Wall Street Reset: Temu Expansion, Supply Chain Spending Pressure Outlook

• PDD’s Q1 revenue and EPS missed Wall Street estimates.
• Macquarie downgraded PDD to ‘Neutral’ and slashed its price target to $87 from $151.
• Bernstein, Citi and Morgan Stanley also lowered their price targets, citing higher spending. 

PDD Holdings (PDD) came under pressure from Wall Street analysts after the company posted a softer-than-expected fiscal first-quarter (Q1) performance, raising concerns about slowing growth and heavier spending tied to its supply chain strategy and global expansion efforts.

The company’s Q1 revenue of RMB106.2 billion ($15.4 billion) and earnings per share of RMB9.51 both missed the analysts’ consensus estimates of RMB109.4 billion and RMB16.37, respectively, according to Fiscal AI data. 

While Q1 operating income increased 22% year-on-year to RMB19.6 billion, net income plunged 15% to RMB12.5 billion. 

Macquarie Downgrades PDD, Slashes Price Target

Macquarie downgraded PDD to ‘Neutral’ from ‘Outperform’ and reduced its price target to $87 from $151, according to TheFly. The new price target implies only a 0.4% upside to the stock’s closing price on Wednesday. 

Analysts at the firm said Q1 results fell short of expectations, highlighting slower growth in online marketing services (OMS), even against a more favorable comparison period supported by trade-in incentives.

Macquarie also warned that expanded spending on logistics and supply chain infrastructure, combined with Temu’s international growth push, may cloud the company’s near-term earnings picture. 

PDD Holdings’ stock edged 0.2% lower overnight on Wednesday, after marking its worst day in a year in the regular session. 

Bernstein, Citi And Morgan Stanley Turn More Cautious On PDD

Bernstein also reduced its price target on PDD, slashing it to $110 from $132 while maintaining a Market Perform rating. The firm described the quarterly report as “mediocre,” reflecting investor disappointment around revenue and profit trends.

Citi analyst Alicia Yap lowered her price target to $123 from $142 but kept a ‘Buy’ rating on the shares. Yap attributed the revenue shortfall to higher merchant support programs and increased investments in supply chain operations and first-party branded products. 

Despite the near-term pressure, Citi said these efforts could eventually improve product standards for both domestic shoppers and overseas Temu customers.

Morgan Stanley also trimmed its price target on PDD to $129 from $148 while maintaining an ‘Overweight’ rating. The firm noted that although operating profit increased 15% during Q1, investors remained concerned about weak online marketplace growth and a steep drop in net income.

Analysts said PDD’s broader business overhaul and elevated investment cycle could continue weighing on financial results through the remainder of the year.

PDD stock has declined by 23% year-to-date. 

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