Since the highs of $210 in February 2021, Pinduoduo Inc. (NASDAQ:PDD) has failed to replicate gains. The stock crashed to trade at $23 in March this year. The last time the stock was trading at $23 was during the onset of the pandemic in March 2020. However, since March this year, Pinduoduo has held to the 2-year low. The stock has started a bullish move, with strong fundamentals supporting it.
In its first-quarter earnings, Pinduoduo reported revenue of RMB23.8 billion or $3.753 billion. The revenue was higher than estimates of RMB20.61 billion and 7% better than the prior year. Pinduoduo also reported a positive income of RMB2.6 billion or $410.1 million in the quarter. The income compares to a loss of RMB2.91 billion last year. The average monthly active users, a key metric for tech firms, grew by 4%.
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On Wall Street, analysts were already eyeing bullish moves for Pinduoduo stock before the earnings. UBS Group raised the stock to a buy from neutral. JPMorgan gave the stock an “overweight rating from “underweight.†The strategists have a price target of $55 from $27. Benchmark had a target of $85 from the previous $156. With Pinduoduo exceeding earnings estimates, we see the stock hitting higher levels.
PDD is emerging from an oversold region and could rise up to $70
Technically, PDDis emerging from an oversold level below $31. The stock has registered more than 18% gains in the past five days following strong earnings. We expect the current bullish momentum to be sustained. The stock will hit resistance at $70, representing gains of around 45%.
Summary
Buy oversold Pinduoduo stock with a chance to ride up to $70. Strong fundamentals align with technicals, supporting a bullish view of the stock.
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