Up 32% in 2025, Is Chinese E-Commerce Giant PDD Still a Buy?

Key Points

• PDD, also known as Pinduoduo, has rallied impressively along with other Chinese stocks in 2025.
• What is to be made of the firm's latest earnings, which fell short on sales but beat on earnings?
• Could President Trump throw a wrench into the stock's ability to succeed in the near term, or can PDD power through? April may bring some answers.

Chinese stocks have quietly achieved a strong return in 2025, trouncing the general drop in U.S. stocks. The SPDR S&P China ETF NYSEARCA: GXC has returned over 15% year-to-date as of the Mar. 24 close. This compares impressively to the nearly -2% return of the S&P 500 Index. This rally is even more pronounced when looking at the return of Chinese e-commerce company PDD NASDAQ: PDD.

The stock has provided a total return of over 32% on the year. Although most of the gain in PDD came before its Q4 earnings report, shares got a moderate 4% lift the day after the results came out. PDD released these results on Mar. 20.

So, what were the most important developments from the company’s earnings? How are Wall Street analysts reacting, and what is the outlook for shares of PDD? How could a coming Trump decision impact the stock? The following addresses these questions and offers perspective on the outlook for PDD shares.

PDD: Sales Growth Slumps Versus Expectations, Earnings Surprise Positively

In Q4, PDD, also known as Pinduoduo, saw a significant divergence in performance when it came to the top and bottom lines. On sales, PDD saw growth of over 24%. Although a solid number, this trailed the over 29% growth analysts were expecting on average. However, adjusted earnings per American Depositary Share (ADS) growth of 15% was impressive. This moderately exceeded analyst expectations.

Still, the company’s revenue growth has slowed significantly, dropping from 123% in the final quarter of 2023. The topic of “intensified competition” within the domestic Chinese e-commerce market was also a key focus in the company’s earnings call.

The company is also looking to support its merchants by reducing the fees they pay PDD by 10 billion Chinese yuan. This aims to increase the strength of its merchant ecosystem, which could significantly benefit PDD in the long term. However, it could also hurt revenue and profitability in the near term.

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MarketBeat tracks three analysts who updated their price target on PDD after the earnings release. These three analysts increased their price targets by 3% on average, consistent with the move in PDD shares the day after the release. The average of their price targets indicates an upside of nearly 15% in PDD shares in relation to their Mar. 24 closing price.

PDD: Putting the de Minimis Exemption in Focus

One key area of focus around PDD has been the effect of tariffs. PDD operates Temu, a low-cost e-commerce platform in the United States. The Trump administration previously removed the de minimis tariff exemptions on China. The de minimis exemption allows goods valued under $800 to enter the United States tariff-free. This exemption significantly benefits Temu and helps keep the cost of its goods so low.

The Trump administration then reversed its suspension of the de minimis exemption. This pause happened because U.S. ports got overwhelmed with foreign goods, which face increased inspection if not under de minimis. Catherine Lim, Head of Asian Equities at Bloomberg Intelligence, says, “all eyes are now on early April” to see if the U.S. de minimis rule is finally abolished.

However, it seems highly possible that Trump will eliminate de minimis for Chinese goods, creating a significant near-term risk for shares of PDD. The firm will take time to adjust, likely creating significant volatility in its revenue and earnings.

The Cato Institute says that 1.3 billion packages entered the U.S. through the de minimis exemption in 2024. A Congressional Research Service report indicated that around one-third of the de minimis goods that entered the U.S. in 2023 came from China. Thus, ending the de minimis exemption could affect about 400 million to 500 million Chinese packages annually.

Depending on how it implements the increased inspection requirements, this could create a massive burden on U.S. Customs and Border Protection. Such a burden could potentially cause Trump to reverse the elimination of the de minimis exemption again after implementation.

PDD: Good Business, But Possibly the Wrong Time

Overall, there appears to be significant risk in the near future for PDD shares. Competition is pressuring the firm’s Chinese business. Meanwhile, its U.S. business, Temu, faces significant risk from potential de minimis changes.

The merchant fee reduction program could also put more pressure on upcoming financials. It may be a good time to sit back, see what happens surrounding the de minimis rule, and observe PDD’s upcoming financials for a few quarters. However, the firm still maintains a strong business model and is trading 40% below its all-time high.