---
title: "PDD Aims to Become \"Costco + Disney\": Launching a New \"Investment Cycle\" to Trade \"Short-Term Profits\" for \"Long-Term Growth\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/287845151.md"
description: "PDD delivered an \"ugly\" report card, but management played a bigger card—investing 100 billion yuan over three years to heavily bet on the supply chain and incubate self-operated global brands. Morgan Stanley and JPMorgan warned of downward revisions to future earnings expectations, while Goldman Sachs argued that investments in \"New Pinmu\" and self-operated brands bring PDD closer to the \"Costco + Disney\" model. Goldman Sachs maintained its Buy rating, and Morgan Stanley lowered its target price but kept an Overweight rating"
datetime: "2026-05-28T01:59:09.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/287845151.md)
  - [en](https://longbridge.com/en/news/287845151.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/287845151.md)
---

# PDD Aims to Become "Costco + Disney": Launching a New "Investment Cycle" to Trade "Short-Term Profits" for "Long-Term Growth"

PDD is trading short-term profits for a heavier long-term growth curve. The latest quarterly financial results fell below market expectations, but the signals released by management were more critical: the company is preparing to invest on a larger scale in its own brands, supply chain co-construction, and merchant ecosystem in exchange for long-term growth over the next few years.

In the first quarter of 2026, PDD's total revenue was 106.2 billion yuan, a year-on-year increase of 11%, missing the market expectation of 108.6 billion yuan. Non-GAAP net profit was 14.1 billion yuan, a year-on-year decline of 17%, significantly lower than the market expectation of 24.6 billion yuan. Following the earnings release, PDD's US shares fell nearly 4% in pre-market trading, as investors initially reacted to the profit gap and the near-stagnation of online marketing services.

During the conference call, Co-CEO Zhao Jiazhen stated that continuing to heavily invest in the supply chain would be the company's core strategy for the next decade. Compared to short-term performance, the company is more willing to focus on feeding back into the ecosystem and long-term value. Co-CEO Chen Lei added that branding is a key opportunity for the next stage of upgrading China's supply chain.

According to Zhuifeng Trading Desk, interpretations from three investment banks point to the same tension: short-term pressure on the income statement, but a reopening of the strategic narrative. **Morgan Stanley and JPMorgan focused on the downward revision of earnings expectations, while Goldman Sachs believed that investments in "New Pinmu" and self-operated brands bring PDD closer to the "Costco + Disney" long-term vision.** For investors, the core question has shifted from "why are profits below expectations" to "can PDD use short-term profit volatility to build stronger long-term barriers."

## Earnings Signals: Profit Under Pressure, But Core Operations Have Not Stalled

PDD's first-quarter performance showed significant divergence.

On the revenue side, total revenue was 106.2 billion yuan, up 11% year-on-year, but below market expectations. On the profit side, Non-GAAP net profit was 14.1 billion yuan, down 17% year-on-year, far below market expectations. Net profit attributable to shareholders fell 15% year-on-year to 12.5 billion yuan, mainly dragged down by non-operating items such as negative investment gains and foreign exchange losses.

At the same time, the operational efficiency of the main business remains supported. The company's operating profit increased by 22% year-on-year to 19.6 billion yuan. JPMorgan also pointed out that **adjusted operating profit increased by 16% year-on-year, and the adjusted operating profit margin was 20%, up 1 percentage point year-on-year, indicating good core operational efficiency.**

The real pressure comes from both ends.

One end is the slowdown in online marketing service revenue. This business grew only 2.5% year-on-year to 49.9 billion yuan in the first quarter, significantly lower than the growth rate of transaction service revenue. The near-stagnation of advertising growth means the platform's traditional monetization engine is downshifting. The other end is the drag on net profit from non-operating items. JPMorgan stated that adjusted net profit was 43% lower than its forecast and market consensus, mainly due to non-recurring item losses exceeding expectations, including interest and investment losses of 632 million yuan, and other losses of 2 billion yuan.

**This makes PDD's first-quarter report not simply a story of "slowing growth," but a starting point for a structural switch, with advertising slowing down, transaction services taking the lead, profit volatility increasing, and supply chain investments heating up.**

## Conference Call Tone: Billions Heavily Invested in Supply Chain

During the first-quarter earnings conference call, PDD's management provided a clearer strategic path.

Responding to analysts' questions about "where the billions will be invested and when results will be seen," Co-CEO Zhao Jiazhen stated that **continuing to heavily invest in the supply chain will be the company's core strategy for the next decade,** "Compared to short-term performance, we are more willing to focus on the long-term value brought by feeding back into the ecosystem and heavily investing in the supply chain."

This statement continues the goal of "Rebuilding PDD in Three Years" proposed by the company at the end of last year. According to previous disclosures, **the special entity "New Pinmu" has been established in Shanghai, with an initial cash injection of 15 billion yuan. The plan is to cumulatively invest 100 billion yuan over the next three years to integrate the supply chain resources of "PDD + Temu," launch a self-operated brand model, and systematically incubate brands for the global market.**

Zhao Jiazhen further explained during the conference call that brand building is not just about traffic support, but a long-term project covering the entire chain, including product design, standard setting, collaborative manufacturing, quality control and warehousing, fulfillment, and after-sales service. The platform hopes to inject sales certainty into the industrial chain, with the platform bearing more risk, while the manufacturing side focuses on high-quality production.

Co-CEO Chen Lei also stated that there is still a large amount of unmet consumer demand in the global market, and branding is a key opportunity for the next stage of upgrading China's supply chain. The company's goal is to systematically incubate a portfolio of globally recognized brands, promoting a value leap in the supply chain.

**This means that PDD's investment direction has gone beyond traditional subsidies and traffic distribution, entering heavier links in the industrial chain. Self-owned brand business, supply chain co-construction, and manufacturing collaboration will become the focus of a new round of capital and resource allocation.**

## Goldman Sachs: Closer to "Costco + Disney," But Profits Will Fluctuate

Goldman Sachs' interpretation of PDD is closest to the "Costco + Disney" logic in the headline.

In its report, Goldman Sachs stated that although first-quarter performance missed expectations, online marketing service revenue growth was weak, and EPS fell 17% year-on-year, transaction service revenue increased by 20% year-on-year, showing that Temu's GMV growth is accelerating. The group's operating profit also increased by 16% year-on-year, reflecting a significant year-on-year improvement in Temu's GMV profit margin.

**More importantly, Goldman Sachs believes that PDD's launch of a three-year investment cycle for its self-owned brand "New Pinmu" will become a multi-year growth driver for Temu and PDD, bringing the company closer to the "Costco + Disney" vision proposed at its IPO in 2018.**

The logic behind this judgment is that PDD is no longer just a platform matching buyers and sellers, but is intervening more deeply in the supply chain, incubating self-operated global brands, and promoting the upgrade of Chinese manufacturing from low-price mass production to high-value-added production. If executed successfully, the company may gain stronger product differentiation and supply chain barriers.

However, Goldman Sachs also lowered its earnings expectations. It reduced its revenue forecasts for 2026 to 2028 by 2% to 5%, and lowered its adjusted net profit forecasts by 11% to 12%. Goldman Sachs currently expects PDD's group adjusted net profit for 2026 and 2027 to be 105 billion yuan and 126 billion yuan respectively, corresponding to year-on-year growth rates of 0% and 20%.

Goldman Sachs also lowered its 12-month target price from $158 to $145, but maintained its Buy rating. Its reasoning is that the current valuation corresponds to a P/E ratio of about 8 times for 2026, or about 4 times excluding cash, making the risk-reward profile still attractive.

In other words, Goldman Sachs acknowledges that short-term profits will be dragged down by reinvestment, but believes the market has overreacted negatively to the miss in marketing services and EPS. For them, PDD's investment focus is shifting from short-term profit margins to long-term GMV, brand assets, and supply chain capabilities.

## Morgan Stanley: Entering a New Investment Cycle, Lowering Target Price

Morgan Stanley's tone is more cautious.

The bank stated in its report that although PDD's first-quarter operating profit increased by 15% year-on-year, online marketing service revenue grew only 2.5%, and net profit missed expectations by 41%, causing market concern. As the company launches a deep business transformation, Morgan Stanley expects that **the new investment cycle in supply chain and self-owned brand businesses will continue to drag down financial performance in the second quarter and the second half of the year.**

Morgan Stanley expects PDD's total revenue in the second quarter to increase by 10% year-on-year, with online marketing service revenue basically flat and transaction service revenue growing by 20%. The bank expects total revenue for the full year 2026 to increase by 10% year-on-year, online marketing service revenue to grow by 5%, transaction service revenue to grow by 16%, Non-GAAP operating profit to increase by 17% year-on-year to 119 billion yuan, and Non-GAAP net profit to decrease by 6% year-on-year to 100.6 billion yuan.

Morgan Stanley lowered PDD's target price from $148 to $129, but maintained its Overweight rating. The main reason for the downgrade was to reflect the first-quarter earnings miss, and it lowered its EPS forecasts for 2026, 2027, and 2028 by 14%, 13%, and 14% respectively.

Morgan Stanley also highlighted that PDD has established a special entity in Shanghai with an initial cash injection of 15 billion yuan and a commitment to invest 100 billion yuan over three years. Currently, the company is going deep into industrial belts, accelerating the integration of supply chain resources, and jointly incubating new brands adapted to different markets and categories.

In Morgan Stanley's framework, **PDD's story has become heavier and longer. In the short term, investment will suppress profits and forecasts; in the long term, self-owned brands and supply chain integration may bring new growth curves.**

## JPMorgan: Core Operational Efficiency Acceptable, But Consensus Expectations May Be Revised Down

JPMorgan's focus is on the gap between financial performance and market expectations.

The bank stated that PDD's first-quarter performance was "mixed," with both revenue and net profit below market consensus. Revenue was 106 billion yuan, up 11% year-on-year, 3% and 2% lower than JPMorgan's forecast and market consensus, respectively. The year-on-year growth rate of online marketing service revenue further slowed to 2%, lower than its forecast and market consensus.

However, JPMorgan also pointed out that adjusted operating profit increased by 16% year-on-year, and the adjusted operating profit margin was 20%, up 1 percentage point year-on-year, indicating that core operational efficiency remains good.

The real problem lies at the net profit level. First-quarter adjusted net profit was 14 billion yuan, 43% lower than its forecast and market consensus. The adjusted net profit margin was 13.2%, down 4 percentage points year-on-year and 9 percentage points lower than expected, mainly due to non-recurring item losses exceeding expectations. The bank expects that following the earnings release, the Bloomberg consensus expectations for PDD's revenue and net profit will be revised down, and the stock price will react negatively to the performance.

**Compared to Goldman Sachs emphasizing the long-term vision and Morgan Stanley emphasizing the investment cycle, JPMorgan's conclusion is more biased towards short-term financial impact, with a larger profit gap, requiring a recalibration of market expectations.**

## Core Divergence: Short-Term Profits vs. Long-Term Barriers

PDD is making a typical reinvestment choice.

If one looks only at the first-quarter financial report, investors see revenue below expectations, net profit significantly missing expectations, and online marketing service growth nearing stagnation. For a platform company previously known for high efficiency and high profit elasticity, these signals are enough to trigger valuation pressure.

But combining the conference call and broker reports, another clue is clear: PDD is actively directing resources towards the supply chain, self-owned brands, and the merchant ecosystem. Transaction service revenue has surpassed advertising to become the largest source of revenue, and the company has explicitly stated it will invest significant resources in building its First-party Brand Business.

**This means PDD's business model is shifting from a light platform to deeper supply chain participation. It hopes to extend platform capabilities to product design, manufacturing, quality control, fulfillment, and after-sales service through certain sales volume, brand incubation, and manufacturing collaboration.**

This path may lead to two outcomes.

In the short term, costs, R&D, sales and marketing expenses, and supply chain investments may increase, leading to greater quarterly profit volatility. In the long term, if self-owned brands and supply chain integration are successful, the company may gain higher differentiation, stronger merchant and user stickiness, and a more solid foundation for global growth.

Goldman Sachs' notion of being closer to "Costco + Disney" essentially points to the same logic: **having both Costco-like supply chain efficiency and pricing power, and incubating a product portfolio with brand recognition and long-term consumer stickiness.** PDD is using short-term pressure on the income statement to exchange for long-term capabilities beyond the balance sheet.

For the market, the key in the coming period is not just when net profit will recover, but whether the 100 billion yuan investment over three years can translate into verifiable growth, whether the supply chain synergy between Temu and PDD can be realized, and whether transaction services and self-owned brands can become new growth pillars after the slowdown in online marketing.

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