PDD Holdings Soared 3.9%—Is This the Dawn of a New Bull Run?

Summary
• PDD Holdings Inc. (PDD) surges 4.64% intraday to $120.38, breaking through its 52-week high of $155.67
• Institutional buying by Mirae Asset and UBS boosts holdings by 9,469.7% and 899.2% in Q1 2025
• GraniteShares 2x Long PDD Daily ETF (PDDL) jumps 10.21%, amplifying leveraged exposure
• RSI near overbought (72.58) and Bollinger Bands suggest a breakout above $112.06

PDD Holdings’ 4.64% intraday surge has ignited market speculation about its next move. With the stock trading at $120.38—its highest level since March 2024—investors are scrambling to decode whether this rally is a sustainable breakout or a volatile correction. The stock’s sharp ascent, fueled by institutional accumulation and leveraged ETF gains, has created a high-conviction bullish narrative, but technical indicators like RSI and MACD hint at potential exhaustion. Traders must now weigh short-term momentum against long-term fundamentals as PDD’s $100 billion merchant support program and margin compression add complexity to its trajectory.

Institutional Buying and Merchant Subsidies Fuel PDD’s Intraday Surge
PDD’s 4.64% rally to $120.38 is driven by a confluence of institutional accumulation and strategic business initiatives. Mirae Asset Global and UBS Asset Management significantly increased their stakes in Q1 2025, with Mirae’s position expanding by 9,469.7% to $4.69 billion. Simultaneously, PDD’s RMB100 billion merchant support program—designed to lower fees and boost sales—has reinvigorated investor confidence in its e-commerce ecosystem. While Q1 revenue grew 10% year-over-year, declining operating margins (from 33% to 19%) highlight the company’s prioritization of long-term market share over short-term profitability. This combination of institutional demand and structural cost-cutting has created a short-term bullish catalyst.

Internet Retail Sector Diverges as PDD Outpaces Amazon’s Mild Rally
The Internet Retail sector remains fragmented, with Amazon (AMZN) rising just 0.26% intraday despite PDD’s sharp rally. This divergence underscores divergent strategies: PDD’s merchant subsidies and platform growth initiatives contrast with Amazon’s AI-driven logistics focus, which has yet to translate into investor enthusiasm. U.S.-China trade dynamics further amplify sector volatility, with cross-border e-commerce players like PDD facing unique headwinds. PDD’s 4.64% gain highlights its asymmetric upside potential in the Chinese market, while Amazon’s muted performance reflects broader skepticism about AI-driven operational efficiency.

High-Leverage Call Options and 2x ETFs Target PDD’s Breakout Potential
• 200-day average: $111.59 (below current price)
• RSI: 72.58 (overbought)
• MACD: 1.57 (bullish histogram)
• Bollinger Bands: $100.496–$112.062 (current price at $120.38 outside upper band)

PDD’s technicals signal a short-term breakout, with key resistance at $115.46 (intraday high) and support at $102.35. The GraniteShares 2x Long PDD Daily ETF (PDDL) surged 10.21%, amplifying directional exposure. For options, two contracts stand out:

Top Option 1: PDD20250801C115
• Strike Price: $115
• IV: 46.32% (moderate)
• Leverage Ratio: 17.78% (high)
• Delta: 0.7298 (moderate sensitivity)
• Theta: -0.5039 (high time decay)
• Gamma: 0.0359 (high sensitivity to price movement)
• Turnover: 164,533
• Payoff at 5% Upside (ST = $126.39): $11.39/share
This contract offers high leverage and gamma, ideal for a continuation of the rally. Theta decay is manageable given the August expiration.

Top Option 2: PDD20250801C117
• Strike Price: $117
• IV: 39.94% (moderate)
• Leverage Ratio: 24.20% (very high)
• Delta: 0.6693 (moderate sensitivity)
• Theta: -0.4717 (high time decay)
• Gamma: 0.0457 (high sensitivity to price movement)
• Turnover: 70,098
• Payoff at 5% Upside (ST = $126.39): $9.39/share
Aggressive bulls may target this for its 24.20% leverage, though the higher strike price requires stronger momentum to offset theta decay.

Action Insight: If $115.46 breaks, consider PDD20250801C115 for a controlled long. For a high-risk, high-reward bet, PDD20250801C117 could capitalize on a sharp rally past $120.

Backtest PDD Holdings Stock Performance
PDD's performance after an intraday surge of 4% has historically shown positive short-to-medium-term gains. The backtest data indicates that such an event has a high win rate across various time frames, with the 3-Day win rate at 51.84%, the 10-Day win rate at 53.18%, and the 30-Day win rate at 56.86%. Additionally, the maximum return observed following this event was 7.78% over 30 days, suggesting that there is potential for significant gains if the momentum continues.

PDD at Inflection Point—Breakout or Correction?
PDD’s 4.64% intraday surge has positioned it at a critical juncture. While the $120.38 level approaches its 52-week high of $155.67, technical indicators and institutional buying suggest a potential continuation of the rally. The GraniteShares 2x Long PDD Daily ETF (PDDL)’s 10.21% gain highlights leveraged ETF demand, but traders must balance this with the stock’s overbought RSI. Institutional accumulation and the $100 billion merchant program provide a fundamental tailwind, yet margin compression remains a near-term risk. Watch for a breakout above $115.46 or a breakdown below $102.35—key levels that could redefine PDD’s trajectory. Act now: Aggressive bulls may allocate to PDD20250801C115, while conservative investors should monitor the 200-day MA at $111.59 for a potential pullback entry. The sector leader Amazon.com (AMZN) rose 0.08%, underscoring the sector’s mixed dynamics.