This week PDD reported strong earnings despite a slight revenue miss. During the earnings call there was a lot of bearish sentiment about future revenue, which led to a sharp selloff for PDD. Currently PDD is trading at the lowest price in 2024, and price levels not seen since Nov. 2023. I think PDD is undervalued here and likely to rebound. After a sharp selloff there is a 3 day rule that suggests waiting 3 days for the price to stabilize. Today would be the 3rd day for PDD, and I think investors want to buy up this dip.

PDD dropped lower than my buy target, but I’m comfortable buying here even if the US enters a recession soon. These are monthly candles and the buy opportunities don’t come around too often, the last one was June 2023. One common question that I’m seeing is whether Chinese stocks could be affected if the US enters a recession. The answer is yes, the entire world would be affected. However, I think the US and China are in an economic war with one another. China wants the US to experience an economic downturn so that China can can become the dominant superpower. I think right now the US is way ahead in the AI race, but I’m interested in Chinese stocks that can also experience growth through the AI boom. In terms of short term price action, I think PDD is very likely to wick back up before the end of the month. We have just 3 trading days left including today. I like this entry as a long term investment or a swing trade. For now I’ll reevalaute the market after NVDA earnings.

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