The Super Bowl 2024 shattered records. More than 124 million TV viewers tuned in in the USA. They not only got to see the Kansas City Chiefs' victory over the San Francisco 49ers or the player's wife and pop icon Taylor Swift. Temu also attracted attention with several commercials. According to experts, the online shopping platform has raised more than USD 30 million for this. An additional USD 15 million was spent on discount coupons and Givaways. Under the slogan "Shop like a billionaire", rows of bargains pop up in the animated films - including clothing, kitchen appliances, furniture and tools. The expensive presentation as part of the biggest TV event in US history is made possible by a powerful mother. Launched in 2022, the Temu app is the international offshoot of the Chinese e-commerce platform Pinduoduo. This in turn is the core of PDD Holdings. The investment company with Chinese roots and a legal domicile in Dublin has been listed on the US technology exchange Nasdaq since 2018.
Almost six years after its IPO, PDD is almost on a par with Alibaba. At the beginning of December, the challenger was briefly ahead of China's e-commerce top dog with a capitalization of just under USD 200 billion. PDD Holdings is courting bargain hunters with particularly low prices and cheap or even free shipping. On Temu, for example, you can find wireless headphones or hoodies for less than CHF 10. In times of high inflation and an uncertain economic outlook, this strategy is proving popular. PDD Holdings is growing strongly: in the third quarter of 2023, sales increased by more than 90% to the equivalent of USD 9.4 billion. Earnings were unable to keep pace, not least due to high advertising expenditure. From July to September 2023, the holding company earned USD 2.3 billion in operating income, "only" just under 60% more than in the prior-year period.
"We have continued to invest resolutely," explained co-CEO and PDD co-founder Lei Chen when presenting the figures. In addition to research and development capacities, capital has been invested in supply chain and agricultural technology. Pinduoduo offers smaller farmers the opportunity to market fruit and vegetables directly. Analysts regard Temu as a key growth driver. The Boston-based platform is now active in 48 countries. In 2023 as a whole, Temu could have contributed more than USD 16 billion to the holding company's sales. According to experts, Pinduoduo grew significantly faster than rivals Alibaba and JD.com in China in the third quarter. On March 18, investors will find out how business went at Christmas. PDD Holdings will then present its results for the fourth quarter and the full year 2023.
The company has recently lost some momentum on the stock market. PDD Holdings has fallen by 7.6% since the turn of the year. At the same time, the Nasdaq stock has shown relatively high volatility. In the first seven trading weeks of 2024, the price fluctuation range was more than 30%. By comparison, Reuters puts the figure for the Nasdaq as a whole at less than 14% for this period. The combination of declining upward momentum and impressive volatility makes PDD Holdings an interesting underlying for yield optimization products. Leonteq has launched Softcallable Barrier Reverse Convertibles on the internet stock. The guaranteed coupon is 12% p.a. in the product currency CHF. Investors who invest in USD receive a 300 basis point higher payout. The barrier is 49% of the initial level. As long as PDD Holdings does not fall to or below this level, investors will receive the nominal amount back in full after 15 months. Otherwise, the partial protection would expire and the investment would be exposed to the full risk of the underlying asset. The issuer is the particularly solvent Basler Kantonalbank. It has the right to call the BRCs early (soft callable).
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