PDD (PDD), formerly known as PinDuoDuo, traded as high as almost $135 on March 20 on high volume. The stock fell faster than it rose. What happened? The Chinese e-commerce firm posted strong Q4 results that appeared too good to be true.

PDD reported revenue growing by a bewildering 123% Y/Y to $12.52 billion. Online marketing services and transactions grew by 57% and 357%, respectively. Skeptical investors are wary of results from China technology because U.S. accounting firms do not audit them. Still, PDD’s growth is unquestionable. It spent heavily on advertising on Google’s Ad Exchange in Europe. PDD’s heavy marketing support for the Temu app in Western markets is paying off.

Risks

Temu products sell at prices that are hard to believe. Sellers somehow manage to sustain a business model that includes free shipping. The bigger worry is that the US-China trade tension escalates further. The U.S. continued to push semiconductor export restrictions in the last year. Although it had limited success in stopping firms from buying chips, the tension may lead to restrictions against Chinese e-commerce firms.
Growth

Should the U.S. block Temu, it would have minimal impact on PDD’s growth. The firm is growing in dozens of countries. As Western consumers seek cheap goods while inflation rises, PDD will thrive.

Once the dust settles on its share price, PDD is a good company to consider.