E-commerce firm Pinduoduo (PDD) is the latest Chinese retailer to post earnings. These are the price levels to watch in the week ahead.
PDD: Weekly Chart
PDD stock trades at $79, with the next resistance target at $90. A drop through $70 could see further losses to key support near $60.
JD.com, Tencent, and Alibaba have all reported results for the three months to June, which showed a steady pick-up in consumer spending, but with less clarity on whether that growth has continued. JD saw its electronics revenue rise, but sales from general merchandise dropped for the quarter.
PDD stock has fallen 3% this year due to increased competition and Chinese economic growth concerns. PDD is expected to post a profit of $1.12 per share, which would mean negative growth of -0.88% versus the same period last year. Revenues are forecast to have increased by 30.8% to $6.14 billion.
The company has beat earnings estimates in each of the last four quarters and may continue that run if we use the early retailer releases as a guide. That led to analysts decreasing Q2 estimates over the past week, leaving more room for a potential surprise.
PDD has been affected by overseas growth concerns, while the situation in China has also lagged. Traders are looking for a further stimulus boost from the government, which may be another driver of gains for PDD.
JD.com was protected from a broader economic slowdown in China as consumers moved towards its lower-priced offerings. That low-cost strategy allowed it to more effectively compete and gain market share from rivals, including PDD.
The slowdown in China has been seen in prices, with the country falling into deflation in July, with consumer prices down 0.3% year-over-year on weak domestic demand. Other developed nations have been dealing with inflation, and that is another reason why China may receive a direct stimulus boost to help consumers.
