Episode Details

PDD Holdings (PDD) Q2 2026 — Q2 2026 (three months ended June 30, 2026): total revenue RMB112,358m (US$16.6bn), UP 8.05%. Operating profit RMB27,764m, UP 7.64%. Net income attributable to ordinary shareholders RMB27,182m, DOWN 11.61%. Non-GAAP diluted EPS per ADS RMB19.33 (US$2.85); GAAP diluted RMB18.45 (US$2.72). Shares closed at $87.07, DOWN 1.48% after opening UP 2.91%. PDD Holdings grew revenue 8.05% and operating profit 7.64% in the June quarter, and net income FELL 11.61%. Every step between the two sits below the operating line, and one of them - other income, net - swung RMB7,518m in the quarter and RMB12,810m across the half, 2.35x everything operating profit added. Neither the release nor the audited 20-F ever decomposes it. THE CALL: BUY (3/5, A CHEAP PLATFORM, A HUGE PORTFOLIO NOBODY CAN REACH, AND EARNINGS SET BELOW THE OPERATING LINE) — base-case value ~$99.21 vs ~$87.07 today. KEY METRICS: - THE SPINE: operating profit RMB27,764m, UP 7.64%, against net income RMB27,182m, DOWN 11.61%. Across the half operating profit is UP 13.02% and net income DOWN 12.68%. The bridge closes to the RMB million and every step of it is non-operating. - THE LINE NOBODY EXPLAINS: other income, net swung RMB7,518m in the quarter and RMB12,810m across the half - 2.35x what operating profit ADDED. On SEC XBRL it was POSITIVE every year 2020-2025, best ever RMB3,119.8m. The half alone is -RMB9,430m. - HALF THE COMPANY IS A PORTFOLIO: cash, restricted cash, short-term investments and debt securities total RMB630,071m. Less ALL RMB215,620m of liabilities (no borrowing among them) = US$61.08bn, or $42.91 an ADS - 49.29% of the share price. - AND IT HAS NEVER BEEN RETURNED: no dividend has ever been paid and no ordinary share or ADS repurchased - the only repurchases in the 20-F are of its own convertible notes. Every physical asset it owns totals US$1.34bn, 1.08% of market value. - WHAT THE MARKET PAYS FOR THE PLATFORM: strip the portfolio and US$62.85bn is left against US$11.74bn of trailing after-tax operating profit - 5.35x, a 26.24% cash yield. At the Nov 10, 2025 closing high the same sum gave 13.35x: a 59.89% de-rating. - THE EARNINGS BASIS, PROVED NOT ASSUMED: the vendor's epsActual IS the company's non-GAAP diluted per ADS, matching four straight quarters exactly. So $2.85 against a $2.76 bar is a real beat - but GAAP diluted is $2.72, which MISSES it and fell 11.08%. - THE CALL: US$61.08bn of net financial assets at 0.65/0.75/0.85 plus US$11.74bn of after-tax operating profit at 5.5x/8.0x/11.0x. Bear $73.27 / base $98.18 / bull $127.22, weighted 25/50/25 = FAIR VALUE $99.21 vs $87.07, +13.95%. BUY 3/5 - and LESS bullish than the nine dated houses at $102.56. What to watch: UP: the September-quarter other income line back near zero, OR any dividend or buyback - the first in the company's history. DOWN: that line repeating at this size, which would be roughly RMB29.6bn a year against a platform earning US$11.74bn. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.