Pinduoduo (PDD), the Chinese ecommerce giant, reported strong results for the third quarter (Q3) of this year, resulting in a surge in its stock price. The company's earnings per share (EPS) surpassed expectations for the third straight quarter, following a miss in the fourth quarter of the previous year. 

PDD's Q3 revenue increased 93.9% compared to the same period last year, reaching RMB 68.84 billion (US$9.44 billion). This significant growth was primarily driven by transaction services, which saw a year-over-year surge of 315% to US$3.99 billion. Revenue from online marketing services also rose by a solid 39% to US$5.44 billion. 

Pinduoduo attributed its strong revenue growth to the continued recovery of consumer sentiment. PDD implemented several policies to support consumption and witnessed robust demand. Notably, PDD highlighted that consumers prioritize a balance between quality and price, which underscores the importance of offering competitive prices alongside good product quality. 

Although Pinduoduo primarily operates in China, it has started expanding into international markets. In September 2022, the company launched Temu in the US, aiming to compete with Amazon in various categories, including clothing, shoes, appliances, beauty, and automotive. While Temu is still in its early stage, PDD acknowledges that uncertainties lie ahead. 

The positive Q3 results have impressed investors and indicate a promising outlook for the upcoming Q4 holiday period. The strong performance of PDD is notable considering the challenges faced by China's real estate market and the lower-than-expected Q2 GDP growth. 

In addition to Pinduoduo's success, its subsidiary, Temu, an e-commerce app focused on selling affordable goods to overseas consumers, has recently achieved considerable growth in Japan and South Korea. Temu has overtaken the popular app Shein in those markets and has maintained its position as the top-ranked shopping app for an extended period. Data from data.ai analysis indicates that Temu's popularity has extended beyond the US, becoming available in over 40 countries. The rapid expansion and positive performance in international geographies highlights the growth opportunities ahead for Temu.

Goldman Sachs also sees significant growth potential for Temu, emphasizing its expansion into numerous international markets. As the app continues to dominate app stores and outpace its competitors in terms of downloads, the company is optimistic about its future growth prospects. Temu's success in Japan is noteworthy, as it became the fastest app to reach four million downloads, surpassing both Shein, a major player in the market, and established platforms like Japanese marketplace Mercari and Amazon. 

Temu outpacing Shein will take on added significance as recent reports suggest Shein is planning an IPO in U.S. markets. PDD could see additional interest if investors believe it is growing faster than Shein. 

PDD shares are up 18% today. It broke above resistance at $120 and is trading at its best level since May 2021. There is little resistance in the stock up to the $150 level. 

Overall, Pinduoduo's impressive Q3 results, driven by strong revenue growth and enhanced consumer sentiment, showcase the company's resilience and ongoing recovery. As PDD expands into international markets and with its subsidiary Temu gaining traction globally, the future looks promising for this Chinese ecommerce giant.