Report by Hedgeye
Revenue growth has been the driver for both stocks, but they are facing tough top line growth comps in 2H23. For PDD, the slowing growth may not be temporary, as F&B delivery is likely to become a smaller part of the business with people out of quarantine, user saturation may be reaching its limit and merchants / consumers may be switching to JD.com’s offer. Felix Wang is also flipping DADA from long to short, as near-term catalysts are shifting. A critical part of his long pitch stemmed from support from short video disruptor, Douyin. However, Douyin surprisingly encountered major obstacles in local life services, including food delivery, in Q2. Competition for DADA is also heating up.