Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St’s investing ideas for FREE.
If you are wondering whether PDD Holdings is attractively priced right now, it helps to look past the headlines and consider what the current valuation is really implying.
The shares last closed at US$101.05, with returns of 5.6% over 3 years and a 9.7% decline over the last 12 months, so recent moves have been mixed for investors thinking about growth potential and risk.
Recent news coverage has largely focused on PDD Holdings as a major player in online retail and its role in global e commerce trends. This context, together with shifting sentiment toward the wider sector, helps frame how investors may be reacting to the stock in the short term.
PDD Holdings currently scores 6 out of 6 on our valuation checks. You can see the full breakdown in our valuation score, which we will unpack using several common methods before finishing with a different way of thinking about what the market price might be missing.
Find out why PDD Holdings’s -9.7% return over the last year is lagging behind its peers.
A Discounted Cash Flow, or DCF, model estimates what a business might be worth by projecting the cash it could generate in the future and then discounting those cash flows back to today.
For PDD Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows reported in CN¥. The latest twelve month free cash flow is CN¥111,441.10m, or about CN¥111.4b. Analysts provide explicit forecasts out to 2027, with projected free cash flow of CN¥164,551.57m, or roughly CN¥164.6b, at that point. Beyond those analyst years, Simply Wall St extrapolates further ten year free cash flow projections using its own growth assumptions.
Discounting this stream of projected cash flows back to today gives an estimated intrinsic value of US$349.09 per share. Compared with the recent share price of US$101.05, the model output suggests the stock is 71.1% undervalued based on these assumptions.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests PDD Holdings is undervalued by 71.1%. Track this in your watchlist or portfolio, or discover 868 more undervalued stocks based on cash flows.
PDD Discounted Cash Flow as at Jan 2026
For profitable companies, the P/E ratio is a useful shorthand for how much investors are paying for each unit of current earnings. It ties the share price directly to what the business is already generating, which many investors find easier to relate to than long range cash flow forecasts.
Story Continues
What counts as a “normal” or “fair” P/E often reflects how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually line up with a lower multiple.
PDD Holdings currently trades on a P/E of 9.75x. That sits below the Multiline Retail industry average of 19.91x and well below the peer group average of 54.12x. Simply Wall St’s Fair Ratio for PDD Holdings is 25.23x. This Fair Ratio is a proprietary estimate of what the P/E might be given factors such as earnings growth, industry, profit margins, market cap and risk.
Because the Fair Ratio blends these company specific inputs, it can be more informative than a simple peer or industry comparison. With the current P/E at 9.75x versus a Fair Ratio of 25.23x, the multiple points to the shares trading below that fair range on these inputs.
Result: UNDERVALUED
NasdaqGS:PDD P/E Ratio as at Jan 2026
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which simply means you attach your own story about PDD Holdings to the numbers you think are reasonable for its future revenue, earnings, margins and fair value.
A Narrative links three pieces together: what you believe about the business, how that belief flows into a financial forecast, and what fair value that forecast points to.
On Simply Wall St, Narratives sit in the Community page, where millions of investors can set their own assumptions and instantly see how their view compares with the current share price and with other users.
Because each Narrative continuously updates when new news, earnings or other data is added to the platform, your fair value stays aligned with the latest information and can help you decide whether the current PDD Holdings price looks attractive, expensive or somewhere in between.
For PDD Holdings, one investor might use conservative revenue and margin assumptions that point to a much lower fair value, while another uses more optimistic inputs that suggest a much higher fair value. This shows how the same stock can reasonably support very different yet clearly defined Narratives.
Do you think there’s more to the story for PDD Holdings? Head over to our Community to see what others are saying!
NasdaqGS:PDD 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include PDD.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com