PDD Set to Report Q2 Earnings: What's in Store for the Stock?

PDD Holdings PDD is scheduled to release second-quarter 2025 results on Aug. 25.

The Zacks Consensus Estimate for PDD’s second-quarter revenues is pegged at $14.35 billion, indicating growth of 7.45% on a year-over-year basis.

The consensus mark for second-quarter earnings is pegged at $1.91 per share, which is down by 13 cents over the past 30 days, indicating a decline from the year-ago quarter's earnings of $3.20 per share.

PDD beat the Zacks Consensus Estimate for earnings in the trailing two quarters of the four, with an average negative surprise of 6.21%.

PDD Holdings Inc. Sponsored ADR Price and EPS Surprise

PDD Holdings Inc. Sponsored ADR price-eps-surprise | PDD Holdings Inc. Sponsored ADR Quote

Key Factors to Consider for PDD

PDD Holdings’ second-quarter 2025 results are expected to reflect slowing revenue momentum and significant profitability pressure, driven by sustained ecosystem investments and intensifying competition. In the last reported quarter, revenues grew just 10% year over year, while operating margin compressed to 19% from 33%, highlighting the strain from aggressive merchant subsidies and promotional programs.

Despite PDD’s efforts to boost revenues through consumer coupon initiatives and the mid-year shopping festival, these measures are expected to have come at the expense of profitability. Heavy discounting and traffic incentives likely kept costs elevated. Sales and marketing expenses had already expanded 43% year over year in the last reported quarter, and the trend is expected to have persisted as the company leaned on promotions to preserve demand.

Competitive dynamics are also expected to weigh on results. China’s e-commerce sector remains fiercely contested, with rivals benefiting more directly from national subsidy programs, leaving PDD’s third-party marketplace model at a disadvantage. Externally, tariffs and shifting regulatory policies are expected to have added pressure on merchants who often lack the scale to adapt, creating further uncertainty for transaction volumes.

Moreover, the strategic decision to scale up the 100 billion support program is expected to sustain high expense levels, limiting the potential for margin recovery. The to-be-reported quarter is therefore expected to underscore the challenges of balancing revenue growth with profitability in an environment marked by intensifying competition and policy headwinds.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.

PDD has an Earnings ESP of -4.19% and a Zacks Rank #5 (Strong Sell) at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies worth considering, as our model indicates that they possess the right combination of factors to exceed earnings expectations in their upcoming releases:

BuildABear Workshop BBW currently has an Earnings ESP of +11.00% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BuildABear Workshop shares have jumped 19.5% year to date. BuildABear Workshop is slated to report its second-quarter 2025 results on Aug. 28. 

Abercrombie & Fitch ANF has an Earnings ESP of +2.62% and a Zacks Rank #3 at present. 

Abercrombie & Fitch shares have declined 38.5% year to date. Abercrombie & Fitch is slated to report its second-quarter fiscal 2026 results on Aug. 27.

Bath & Body Works BBWI currently has an Earnings ESP of +3.17% and a Zacks Rank #3.

Bath & Body Works shares have declined 23.6% in the year-to-date period. Bath & Body Works is scheduled to report its second-quarter fiscal 2026 results on Aug. 28.

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This article originally published on Zacks Investment Research (zacks.com).

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