Retailer PDD Holdings (NAS100:PDD) releases first quarter earnings on Tuesday with the stock trying to reclaim the 2025 highs.
The price of PDD shares trades at $119.24 with the 2025 highs set at the $133.34 level.
PDD’s first-quarter earnings report could serve as the next big driver for its share price, Morgan Stanley analysts said.
The retailer is set to release its financial results on Tuesday morning and the investment bank sees potential upside depending on the strength of its online marketing services (OMS) revenue and profits.
“We believe its 1Q25 OMS revenue growth and non-GAAP net profit could be the next share price catalyst,” analysts wrote. Morgan Stanley expects OMS revenue to rise 11% year over year, marking an 18% growth in gross merchandise volume (GMV), and non-GAAP net profit to hit 28 billion yuan.
Analysts also see the company continuing to gain market share in the domestic market, forecasting GMV growth that outpaces the broader industry’s 6% expansion. However, they added that OMS revenue is likely to grow at a slower rate than GMV, as the company increases subsidies to merchants.
Morgan Stanley outlines three potential scenarios for the quarter, with a base case, which it assigns a 60% probability, is for OMS revenue growth of 11–14% and profit of 27–28 billion yuan.
A more bullish outcome would be stronger revenue growth and profit of up to 30 billion yuan, which could boost the share price by 5–15%. However, weaker numbers than these scenarios could see the stock down more than 10%.
Despite paying larger subsidies to merchants and consumers, Morgan Stanley believes some of the pressure could be “partially offset by less spending in Temu US”.
The 2025 price high could come into play this week for PDD stock.