Why Pinduoduo Holdings’ share price fell today

shares Pinduoduo Holdings (NASDAQ: PDD) Shares in Pinduoduo and Temu fell today amid broader fallout after the parent companies of Pinduoduo and Temu were ordered to liquidate by a Hong Kong court. China Evergrande GroupOnce the largest real estate developer in China.

As a result, the stock fell 7.6% as of 12:20 p.m. ET on Monday.

Red stock chart with downward arrow.

Image source: Getty Images.

China risks rise again

U.S.-listed stocks generally fell iShares MSCI China ETF (NASDAQ: MCHI) It also fell 1.9%.

While the incident does not appear to have had a direct impact on Pinduoduo Holdings, it highlights another troubled area of ​​China’s economy and suggests that recovery in the world’s second-largest economy appears to be far off.

Despite China’s broader challenges, Pinduoduo has maintained rapid growth and is a rare Chinese technology stock to post strong returns in recent years. However, investors may take the opportunity to take profits on Pinduoduo as concerns that continued economic weakness in China could weigh on the stock.

What’s next for PDD?

As Pinduoduo continues to gain market share, Pinduoduo’s stock price has risen accordingly. Alibaba and Jingdong Leveraging its popular social commerce model, transactions on Pinduoduo are driven by group buying. Its discount e-commerce site Temu has also taken off in international markets, giving it exposure outside China, but it’s unclear whether Temu is profitable.

So far, Pinduoduo has proven the effectiveness of its business model and growth strategy, but all growth stories eventually slow down, and the problems with the Chinese economy are likely to affect Pinduoduo’s business sooner or later, especially with the liquidation of Evergrande Waiting for the news to come out. .

Now, investors appear to be reacting to this reality.

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Jeremy Bowman The Motley Fool has a position in The Motley Fool has a position in and recommends The Motley Fool recommends Alibaba Group. Motley Fool owned disclosure policy.

Why Pinduoduo Holdings’ share price fell today Originally published by The Motley Fool

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