PDD: Grizzly Research Is Wrong That the Firm Is Dying; Waiting for a Pullback for Better Entry

Grizzly Research, or Grizzly, released a short-selling report on narrow-moat PDD Holdings, or PDD, leading to a 5% stock price drop on Sept. 7. We think the conclusion that PDD is a dying company lacks merit. PDD continued to outperform Alibaba and JD.com in its second-quarter revenue and bottom line by a wide margin. We keep our fair value estimate at USD 117. We believe PDD is the best positioned amid value-for-money consumption trends given its strong network of merchants providing such products and consumers’ identification with PDD as such a platform. That said, we think the short report may negatively affect sentiment and share price in the near term. We recommend waiting for a pullback to buy the shares.