Stock Pitch for PDD Holdings (NASDAQ: PDD)

PDD Holdings, the parent of Pinduoduo, presents a compelling investment case due to its
innovative approach to e-commerce, significant growth in the U.S. with its app Temu, and a
unique value proposition. Along with impressive revenue growth and an aggressive expansion
approach, there is significant evidence to outperform the market. PDD Holdings has shown
robust growth, with revenue growing significantly in Q3 2023, outperforming analyst estimates.
This performance is attributed to the company's focus on offering low-priced products and
service improvements, such as quality assurance and fast refunds.

PDD Holdings operates through its fast-shopping app, Temu, in the U.S. and Pinduoduo in
China. With revenue coming from e-commerce sales, the business model offers a wide range of
products at competitive prices. Its gamified shopping experience differentiates it in the e-
commerce sector, adding elements of entertainment to the traditional online shopping process.
This strategy has been crucial in attracting and retaining customers.

The company’s revenue is driven by sales volume on its platforms, underpinned by its
competitive pricing strategy and engaging user experience. The cost structure is influenced by
aggressive marketing, customer acquisition costs, and subsidies to attract users. As the e-
commerce market continues to evolve, PDD Holdings is likely to further leverage its cost-
effective model to expand its market share, focusing on scaling efficiently to balance growth
with profitability. This has resulted in the company's Levered Free Cash Flow (FCF) margin to
significantly exceed the sector median, indicating strong operational capability.

PDD Holdings competes with a range of e-commerce platforms and traditional discount
retailers. Its main competitive advantages are its low pricing and unique shopping experience,
which have allowed it to carve out a significant niche. This approach positions it favorably
against competitors, challenging both online retailers and brick-and-mortar discount stores.