PDD is extremely oversold after the recent post earnings selloff. PDD had some very strong numbers, but the earnings call was a disaster because the Board members essentially said strong competition will make it difficult for PDD to maintain high profit margins and revenue. I think this selloff is an overreaction to poor choice of words from the earnings call. PDD competes with strong foreign competitors like AMZN and MELI, as well as domestic competitors like BABA. The tough competition is expected and doesn’t justify a 42% decline in the stock price.

In terms of the price action, PDD opened with a bullish gap higher today. I have $95.20 as the next key resistance target to monitor, and local highs around $111.80. I think PDD experiences a recovery back to $153+ over the next few months.

PDD Rebounds at the 1.382 Fib Retracement Level

PDD has rebounded from the 1.382 fib retracement level. This is a very discounted level, and if this support level holds it is an opportunity to invest at a steep discount after the recent 42% decline from the post earnings selloff.

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