With Temu's profitability inflection point approaching and domestic revenue growth re-accelerating, Pinduoduo has entered a new stage of growth.
According to the &#34;Zhui Feng Trading Desk,&#34; Goldman Sachs released its earnings review report for Pinduoduo Holdings (PDD) in the fourth quarter of 2025, maintaining a buy rating with an unchanged 12-month target price of $158.
Goldman Sachs estimates that the group's adjusted net profit for the first quarter of 2026 will be 26 billion yuan, a year-on-year increase of 55%; and for the full year, adjusted net profit will be 119 billion yuan, a year-on-year increase of 11%.
Goldman Sachs has listed Pinduoduo as one of its core large-cap preferred picks for the Chinese internet sector in 2026. The company is currently trading at an approximate 2026 estimated P/E ratio of 9 times, significantly lower than the median of 16 times for the Chinese internet coverage within Goldman Sachs' portfolio. As of the end of 2025, its net cash was approximately $70 billion, accounting for about 50% of its recent market capitalization, while the current market value gives almost no valuation to the Temu business.
Pinduoduo's stock price has fallen approximately 23% over the past 12 months, underperforming the Nasdaq Composite Index by more than 37 percentage points. Goldman Sachs believes that at the current price level, the company has multiple catalysts, including accelerating revenue growth, Temu's profitability inflection point, AI application potential, and strong advertising technology capabilities, offering a highly favorable risk-reward ratio.
<h2>Temu's Business Model Transformation Nears Completion, Profitability Inflection Point Expected in 2027</h2>
Regarding Temu's business model, according to Goldman Sachs' research report, the platform has largely completed its transition to a &#34;local-to-local&#34; delivery model in developed markets such as the United States and Europe, significantly enhancing its business resilience. Goldman Sachs estimates that Temu's global GMV will exceed $100 billion in 2026, with the accumulated scale laying the foundation for entering a profit monetization phase.
Goldman Sachs predicts that Temu's EBIT will turn from an estimated loss of 7.7 billion yuan in 2026 to an estimated profit of 3.2 billion yuan in 2027, marking a profitability inflection point. In terms of data, Temu's global monthly active users (MAU) reached 516 million in February 2026, covering multiple regions including the United States, Europe, and Asia.
The strong performance of transaction service revenue also supports the above expectations. In the fourth quarter, this revenue increased by 19% year-on-year, further accelerating from 10% in the third quarter and exceeding expectations. This was mainly due to the recovery of US business driven by a temporary easing of tariff policies, and the continued growth of &#34;Duoduo Maicai&#34; after Meituan Select's scale contraction.
Goldman Sachs expects transaction commission revenue growth of +19% for the first quarter of 2026 and +20% for the full year.
<h2>&#34;New Pin Mu&#34; Three-Year 100 Billion Investment Launched, Deepening Supply Chain Moat</h2>
Pinduoduo recently announced the establishment of &#34;Xin Pin Mu&#34; (New Pin Mu), with an initial scale of 15 billion yuan and plans to invest a cumulative 100 billion yuan over the next three years. This initiative aims to incubate self-operated global brands, promote the upgrading of Chinese manufacturing to high-value-added production, and simultaneously deepen the common supply chain infrastructure of Pinduoduo and Temu.
According to Goldman Sachs' analysis, this strategic deployment will strengthen the company's overall differentiation advantage and competitive barriers, helping it to continuously outperform peers in the long term. It is worth noting that management has reiterated for the sixth consecutive quarter its intention to increase reinvestment in the early stages and has cautioned about potential fluctuations in quarterly profits.
Against this backdrop, Goldman Sachs has slightly lowered its 2026 profit forecast for the domestic core business by 1% to 114 billion yuan and reduced the valuation multiple for the domestic main platform from 12 times to 10 times. However, the target price remains unchanged due to the increase in net cash. Goldman Sachs expects EBIT for the group in the first quarter and full year of 2026 to be 25 billion yuan and 115 billion yuan, respectively.
Furthermore, the company also launched the &#34;Free Village Delivery&#34; program in the fourth quarter, building its own last-mile logistics infrastructure and covering village transportation costs, further strengthening its penetration depth in lower-tier markets.
<h2>Ample Net Cash, Outstanding Valuation Attractiveness</h2>
As of the end of 2025, Pinduoduo held approximately $70 billion in net cash (approximately $60 billion after deducting restricted funds), equivalent to about 50% of the company's market capitalization, providing ample ammunition for continued strategic reinvestment.
From a valuation perspective, Pinduoduo is currently trading at an approximate 2026 estimated P/E ratio of 9 times, a significant discount compared to the median of 16 times for Goldman Sachs' China internet coverage portfolio. Moreover, the current market value barely incorporates any valuation premium for Temu.
Goldman Sachs derived a 12-month target price of $158 using the sum-of-the-parts (SOTP) method. They believe that with Temu's profit inflection point approaching, the potential for AI applications to be unleashed, and the synergy of its strong advertising technology capabilities (Pinduoduo is a pioneer in ROI-oriented marketing tools) with its cost-competitive supply chain advantages in China, the company's valuation has significant room for re-rating.

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Goldman Sachs is bullish on Pinduoduo, believing that Temu (cross-border e-commerce business) has largely completed its transition to a "local-to-local" delivery model in developed markets such as Europe and the United States, significantly enhancing its business resilience. They forecast Temu will reach its profitability inflection point in 2027, with an estimated profit of 3.2 billion yuan. Goldman Sachs also believes that with accelerating domestic revenue growth and a low valuation, the current risk-reward profile is highly attractive

- Pinduoduo has entered a new growth phase as it approaches profitability with Temu and sees renewed domestic revenue growth.  
- Goldman Sachs maintains a buy rating for Pinduoduo with a target price of $158, forecasting significant profit increases in 2026 and listing it as a top choice in China's internet sector.  
- The company plans to invest $1 billion over three years in its "Xin Pin Mu" initiative to enhance its supply chain and brand development, emphasizing its strategic positioning amid competitive pressures.

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Goldman Sachs: Temu Enters "Monetization" Phase, Pinduoduo's New Growth Inflection Point Has Arrived!