Why PDD Holdings Shares Are Down 4% Today

Even if PDD Holdings (PDD -4.09%) had little property news on Tuesday, its stock hurt by the latest moves by analysts. Several experts following the Chinese e-commerce operator cut their price targets a day after its latest earnings release — one even downgraded its recommendation — leading to a sell by Mr. Market.

PDD’s American Depository Receipts (ADRs) ended the day more than 4% lower in price, contrasting unfavorably with the slight gain (0.2%) at the bell. S&P 500 index.

Concerns about the company’s second quarter and its future

Although PDD posted very strong growth in some of the fundamentals in the second quarter, the company fell short of the analyst consensus revenue estimate, although it beat profitability. Management’s statement about potentially tough times ahead also dampened investor sentiment.

These developments and other downsides have some analysts following the stock concerned. City GroupAlicia Yap went so far as to downgrade her recommendation by one key to neutral from her previous purchase. Yap also made a significant cut in the target price for PDD, which is now $120 per ADR, where it was previously $194.

For the analyst, the future of PDD is rather opaque. She wrote in a new research note that “given the limited investor communication and lack of operational metrics and financial breakdown disclosure, along with management’s intentional/proactive commentary on the cautious outlook, the stock is likely to be limited until PDD managed to regain the confidence of investors through several quarters of consistent results”.

Analysts with scissors

While other experts refrained from downgrading their PDD recommendations, plenty of them cut their price targets on Tuesday. Among the cutters it was Bank of AmericaIts Joyce Lu, who now believes the stock is valued at $170 per ADR from her previous high of $206. Still, he maintains his buy recommendation for the company. Similarly, Goldman Sachs Forecaster Ronald Keung made a cut from $184 per ADR to $165, while keeping his buy rating intact.