Pinduoduo Inc. (NASDAQ: PDD) has confirmed the earnings report release date, which is on Monday, March 21, 2022, after market close.
What to look for: The company is investing in a project expected to improve China's agricultural sector but has indicated that this is likely to impact earnings in the near term. Pinduoduo has been emphasizing on R&D investment following a massive investment in sales and marketing in the last five years. In addition, last year the company launched an RMB10 billion agriculture initiative which it said it would channel its profits too.
Earnings: Stockearning’s Estimated EPS for the fourth quarter is expected to be around $0.35 per share compared to a loss per share of $0.17 a year ago. in the third quarter, the company produces an earnings surprise of 1000% with actual EPS of $0.22 per share relative to estimated EPS of $0.02. Historical EPS performance shows that the company has beat estimates eight times(57%) and missed four times (28%).
Revenue: Pinduoduo anticipates revenue increase to RMB29,966 million in Q4 2021 compared to RMB26,547 million a year ago. This represents a 13% YoY growth and will be the slowest growth since the company went public in 20218. In recent quarters, growth has stalled and slowed since it delivered a 238% YoY growth in Q1 2021. For the full year, the company expects revenue of RMB97,899, representing a YoY growth of 65%. Monthly average active users growth will slow but grow to 754.4 million, which will be a 4.8% growth from last year. Although the company doesn't give forward guidance, the analyst expects it to grow revenue by 32% in fiscal 2022.
Stock movement: PDD shares continue to hemorrhage in the wake of the crackdown in China on tech stocks. Interestingly, following the earnings release, the company's shares have been DOWN 7 times in the past 13 quarters. So, the historical price reaction suggests a 53% probability of the share price going DOWN following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-13%, while the predicted volatility on the seventh day is +/-11%.
What analysts are saying: JPMorgan analyst Andre Chang downgraded the stock from Buy to Sell and also slashed the price target from $105 to $23. Chang told investors that While Chang believes Pinduoduo has the prospects to outperform China's e-commerce marketplace in years to come, his sector checks with various brands indicate that improvement may be restricted in the near term, and the Chinese tech sector could face significant selloff without pricing support.
Citi analyst Alicia Yap upgraded the stock from Hold to Buy and set a price target of $80. After the selloff following the Q3 earnings, the analyst believes the shares are attractively priced. Yap told investors in a research note that even with growing interest rate concerns and lackluster consumer patterns, the company should be able to sustain its profitability trend. According to the analyst, Duoduo Grocery has adaptable user metrics and market gain prospects.
Related News
Vail Resort Inc. (NASDAQ: MTN) Earnings Expectation, Fiscal Q2 2022 EPS of $5.73 on revenue of $966.3 Million
Oracle Corporation (NYSE: ORCL) Misses Q3 2022 Earnings But Matches Revenue Estimates