Temu’s Biggest Bargain: Its Parent Company’s Stock

If you’re looking for a bargain backpack or pair of shoes, Temu might seem like the ideal place to look. If you’re looking for a bargain stock, the price tag on Temu’s parent, PDD Holdings, certainly seems tempting.

Since PDD’s top management warned two weeks ago that rising competition would put downward pressure on its profits in the future, PDD stock has been trading 40% below its high for the year. As a result, PDD’s valuation, measured as a multiple of next year’s revenue, is now almost the same as that of Alibaba Group, the more mature Chinese e-commerce giant. Given that PDD’s top line surged 86% in the second quarter while Alibaba’s grew just 4%, PDD would seem to deserve a much bigger premium.