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PDD Holdings Inc (NASDAQ:PDD) stock is flapping its wings wildly after hitting a Death Cross on the charts.
The stock, down 33.62% year-to-date and -21.50% over the past month, just crossed that ominous technical threshold where the short-term moving average dips below the long-term average. Translation? The bearish clouds are thickening.
Chart created using Benzinga Pro
PDD Holdings, the parent company of Temu, is feeling the heat. Temu’s low-priced lure is creating headaches for rivals like Amazon.com Inc (NASDAQ:AMZN), but is Temu's pricing strategy too good to be true?
With margins tight and costs rising, the sustainability of those rock-bottom prices is in question. The legal spat with Shein over Temu's profitability adds to the uncertainty.
In a surprise twist, PDD’s recent earnings report shocked investors, causing the stock to plummet. Despite a staggering 86% revenue growth year-over-year, the company’s revenue missed the mark, falling short of the 100 billion yuan (approx. $14.11 billion) target.
Read Also: What’s Going On With Temu Parent PDD Holdings’ Stock After Earnings?
Coupled with a $55 billion market cap drop and a gloomy economic forecast, PDD’s growth engine seems to be sputtering.
From a technical standpoint, PDD is sailing through stormy waters.
Chart created using Benzinga Pro
The stock's price is below its eight, 20, 50 and even 200-day simple moving averages.
Chart created using Benzinga Pro
The Moving Average Convergence Divergence (MACD) indicator is flashing bearish signals, and the Relative Strength Index (RSI) at 27.99 suggests the stock is oversold.
Investors should brace for turbulence as PDD's chart signals continued bearishness. While the stock is currently experiencing slight buying pressure, the overall trend suggests that it might be best to steer clear of PDD until the skies clear.
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Image: Shutterstock
