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PDD Holdings (NasdaqGS:PDD) has put solid numbers on the board for FY 2025 so far, with third quarter revenue at about C¥108.3b and basic EPS of C¥20.96, alongside trailing twelve month revenue of roughly C¥418.5b and basic EPS of C¥73.34. The company has seen revenue move from C¥99.4b in the third quarter of 2024 to C¥108.3b in the third quarter of 2025, while quarterly basic EPS went from C¥18.02 to C¥20.96, setting up this latest print against a backdrop of consistently large net income figures. For investors, a key question is whether margins can hold up well enough for this earnings profile to remain compelling.

With the headline numbers on the table, the next step is to see how this earnings run rate lines up with the most common narratives around PDD Holdings and where those storylines may need updating.

See what the community is saying about PDD Holdings

Margins Softening From 29.1% To 24.4%

• The trailing net profit margin in the data is 24.4% compared with 29.1% a year earlier, alongside trailing twelve month net income of about C¥102.3b on C¥418.5b of revenue.
• Bears argue that heavy merchant support, discounts, and global expansion will keep squeezing profitability, and the margin data partly lines up with that concern:
  • The drop from 29.1% to 24.4% suggests earnings are not keeping pace with revenue, which fits the bearish view that aggressive support programs and fee cuts are weighing on operating profit.
  • At the same time, net income over the trailing twelve months sits around C¥102.3b, which shows the business is still highly profitable even as margins compress, so the bearish case hinges on how long this lower margin level persists.

P/E Of 9.8x Versus 64.8x Peers

• PDD trades on a trailing P/E of 9.8x compared with a peer average of 64.8x and a North American Multiline Retail industry average of 20.1x, and the DCF fair value in the data is US$176.52 versus a current share price of US$102.61.
• Supporters of the bullish view see this wide valuation gap as a key part of the upside story, but the earnings profile in the data gives a mixed picture:
  • The stock sits roughly 41.9% below the DCF fair value and also below an analyst price target of about US$145.93. This supports the bullish claim that the market is pricing PDD more cheaply than its earnings power and the growth forecasts of 9.4% per year for earnings and 8.2% per year for revenue might justify.
  • However, one year of negative earnings growth versus a 5 year earnings growth rate of 56.2% per year shows the recent trajectory is less steep than the longer history. This is the main tension bulls need to account for when leaning on the valuation discounts.

Quarterly Net Income Holding Above C¥27b

• Net income excluding extra items in the last three quarters of FY 2025 sits at C¥29.3b in Q3, C¥30.8b in Q2, and C¥14.7b in Q1, versus C¥27.4b in Q4 2024 and C¥25.0b in Q3 2024, alongside trailing twelve month net income of about C¥102.3b.
• The consensus narrative expects ecosystem investments and global expansion to support long term revenue and margin trends, and the current numbers give investors both support and points to question in that middle ground view:
  • On one hand, the business is producing quarterly net income in the C¥25b to C¥31b range and trailing basic EPS of C¥73.34. This lines up with the idea of a large, established earnings base that could benefit if revenue grows at the forecast 8.2% per year and margins stabilize.
  • On the other hand, the decline in trailing margin from 29.1% to 24.4% and slower forecast growth than the broader US market mean the consensus relies on ecosystem spending eventually paying off, something that is not yet fully visible in the reported figures alone.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for PDD Holdings on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Reading through all this, the picture might feel mixed. It can help to look at the numbers yourself and stress test your own view while sentiment is still forming around these 1 or more rewards investors are optimistic about, starting with the 4 key rewards.

See What Else Is Out There

PDD Holdings is dealing with softer net margins, a recent patch of weaker earnings growth, and questions about how long heavy ecosystem spending will stay this intense.

If you are uneasy about that pressure on profitability and momentum, it may be useful to compare it with companies screened as 55 high quality undervalued stocks while sentiment is still divided.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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