PDD Q1 2026: I'm Watching, Not Buying Yet

I've had PDD on my watchlist for a while. Q1 2026 results just gave me a lot to think about, and not all of it is encouraging.

Revenue grew 12.5% year over year. Net income fell 11% year over year. Non-GAAP net income fell 12%. These are real decelerations from a company that was posting 80-100% growth rates two years ago. The Temu international expansion is at the center of this: European regulatory scrutiny, US tariff headwinds, and rising compliance costs across multiple jurisdictions simultaneously. These are structural costs, not one-time items.

The EPS came in at USD 2.36 diluted, beating the USD 2.13 consensus. The stock went up. That tells me the market had already priced in something worse, and the slight beat was enough to trigger relief.

What I keep coming back to: the core Pinduoduo domestic business is genuinely strong. China's value-oriented consumer segment is sticky and growing. The question is whether Temu eventually earns back its compliance costs, or whether it becomes a multi-year drag that suppresses what would otherwise be a very profitable domestic franchise.

I'm not adding at current levels. I want two more quarters of data to see whether revenue growth stabilizes above 15%. If it does, the valuation starts to look interesting. If it keeps decelerating toward single digits, the story changes fundamentally.