PDD Holdings Surges 2.66% Amid Undervaluation Narrative and Bullish Technicals – What’s Fueling the Move?

Summary
• PDD Holdings (PDD) trades at $131.94, up 2.66% intraday, outperforming a flat Internet Retail sector.
• The stock trades 2.6% above its 200-day moving average and 5.4% below its 52-week high of $155.67.
• Analysts at Simply Wall St and Maxell highlight a $165 fair value target, suggesting 25% upside potential.
• Options activity intensifies ahead of the October 3 expiration, with $135 and $136 calls seeing heavy turnover.
• PDD’s dynamic P/E of 14.75 and 33% YTD gains position it as a growth story with valuation intrigue.

Undervaluation Narrative and Earnings Momentum Drive PDD’s Rally
PDD’s 2.66% intraday surge aligns with a compelling narrative of undervaluation highlighted by Maxell and Simply Wall St. The stock trades at a 22% discount to its $165 fair value estimate, driven by its scalable platform economics and new user growth. Recent unaudited Q2 results (Aug 25) showed revenue of RMB103.98 billion, reinforcing confidence in its business model. While no single headline event triggered the move, the cumulative effect of strong revenue growth, a discounted cash flow model suggesting undervaluation, and a 33% YTD rally has positioned PDD as a focal point for investors seeking growth in the e-commerce sector.

Internet Retail Sector Mixed as PDD Defies AMZN’s Weakness
While PDD surged, the sector leader Amazon (AMZN) declined 0.27% intraday, reflecting divergent momentum. PDD’s outperformance underscores its unique positioning in the e-commerce space, leveraging a cost-effective platform and expanding user base. Unlike AMZN’s struggles with logistics and regulatory scrutiny, PDD’s growth is fueled by its direct-to-consumer model and strong gross margins. This divergence highlights PDD’s ability to capitalize on its niche despite broader sector headwinds.

Bullish Setup: Key Levels, ETFs, and High-Leverage Options to Watch
• MACD: 3.14 (Signal: 3.23, Histogram: -0.09) – bearish crossover but price remains above signal line.
• RSI: 59.75 – neutral territory, avoiding overbought/oversold extremes.
• Bollinger Bands: Price at $131.94 (Upper: $133.45, Middle: $126.05) – near upper band, suggesting short-term overextension.
• 200D MA: $111.13 (below current price), 30D MA: $124.05 – bullish divergence.
• Support/Resistance: 200D support at $118.12, 30D support at $116.35; key resistance at $133.45.

Options Picks:
• PDD20251003C135 (Call, $135 strike, Oct 3 expiry):
- IV: 32.30% (moderate)
- Leverage Ratio: 82.42% (high)
- Delta: 0.3479 (moderate sensitivity)
- Theta: -0.3128 (rapid time decay)
- Gamma: 0.0524 (high sensitivity to price swings)
- Turnover: $316,964 (liquid)
- Payoff at 5% Upside: $138.53 → $3.53 gain per contract. This call offers aggressive leverage for a potential breakout above $133.45, with high gamma amplifying gains if the stock accelerates.
• PDD20251003C136 (Call, $136 strike, Oct 3 expiry):
- IV: 37.52% (elevated)
- Leverage Ratio: 77.57% (high)
- Delta: 0.3273 (moderate sensitivity)
- Theta: -0.3187 (rapid time decay)
- Gamma: 0.0441 (moderate sensitivity)
- Turnover: $22,877 (liquid)
- Payoff at 5% Upside: $138.53 → $2.53 gain per contract. This contract balances leverage and liquidity, ideal for a measured bullish bet with defined risk.

Trading Setup: Aggressive bulls should target a break above $133.45 (Bollinger Upper Band) to validate the bullish case. A close above $135 would trigger the $135 call’s delta to rise, amplifying gains. For conservative plays, the $136 call offers a safer entry with 77% leverage. Both contracts benefit from high gamma, making them responsive to volatility spikes ahead of October 3.

Backtest PDD Holdings Stock Performance
Key findings• The strategy buys PDD Holdings (ticker: PDD.O) whenever the stock closes up 3 % or more on the day (“surge”), then holds for a maximum of five trading days. • Sample period: 1 Jan 2022 – 24 Sep 2025. • Result highlights:  – Cumulative strategy return: 0.35 % (nearly flat despite 12 % annualised rate owing to low exposure).  – Max draw-down: 52.5 % (high volatility around surges).  – Average trade: +0.65 %; hit ratio 53 %.  – Average winner: +8.46 %; average loser: –7.99 %. • Interpretation: Momentum from a 3 % up-day in PDD has not provided a strong, consistent edge over the next week; returns are small and risk is high. Assumptions / auto-choices1. “Intraday surge” approximated with close-to-close daily return ≥ 3 % because tick-level high/low data were not requested. 2. Entry assumed at the next market open; exit either on day-5 close or earlier if stop / take-profit rules are hit (none were set beyond the 5-day limit). 3. No transaction costs or slippage included. Interactive resultsPlease explore the detailed back-test table, equity curve and trade list via the module below.

PDD’s Rally Gains Legs – Watch for $133.45 Breakout or Regulatory Catalysts
PDD’s 2.66% intraday surge reflects a compelling mix of undervaluation, strong earnings momentum, and bullish technicals. The stock’s proximity to its 52-week high ($155.67) and a $165 fair value target suggests further upside potential. However, investors must monitor regulatory risks in the EU and U.S. import policies, which could disrupt its growth trajectory. The $133.45 Bollinger Upper Band is a critical level to watch; a breakout would validate the long-term bullish case. Meanwhile, Amazon’s -0.27% decline highlights sector divergence, but PDD’s unique value proposition positions it to outperform. Action Insight: Buy the $135 call (PDD20251003C135) if $133.45 breaks, or scale into the $136 call for a measured bullish play.