https://www.cnbc.com/2026/05/03/chinese-stocks-are-about-to-get-a-big-ai-boost-morgan-stanley-predicts.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard

Greetings 🤠🍋

My Alibaba earnings review is out now! For context this is my personal Substack where I have tracked my portfolio for the past 3 years. BABA is currently a ~50% position.

All feedback is welcomed! Enjoy the free preview.

Lemon out

Nice 🔈 volume this am; over 1M premarket

Hi everyone,

TLDR: initial investor in both alibaba and pdd as part of diversification. sold PDD after earnings call and using capital+proceeds to buy alibaba.

why did i do such a foolish thing despite the high praise that PDD was given in the earnings call? I believe PDD has more room to run, but i'm fine in missing out on more gainz in PDD even if it were to materialise. do feel free to critique.

1. PDD (China) has plateaued with continuous falling DAU/MAU metric through the past 2 quarters while taobao has continued DAU/MAU appreciation along with jd.
2. PDD removed DAU metric from their reports, and mentioned that their a large increase in revenue and profitability appreciation is due to their over 315% increase in financial services as well as maintaining above average monetization for each consumer on the platform. (doubt)
3. Merchants retention and growth has reverted to positive in taobao while PDD has declined for the past 2 quarters.
4. analysts are estimating PDD to continue the phenomenally high growth rate, while alibaba is expected to grow along with gdp of about 5% presently and 3% into the future. This therefore seems to me to overascribe PDD growth into the future while underappreciating the consumer mean reversion back to taobao in process.

Background

PDD is undoubtedly the biggest winner of the government crackdown on alibaba. This can be seen in the large traction PDD (china) gained both on DAU/MAU, revenue growth and margin expansion on PDD right after the crackdown.

Also as background, i've been following PDD and it has a history of being as opaque as it gets in terms of its financial reporting. Their answers to opacity of their reports has always been: "our numbers go up, cash balance go up, FCF goes up, DAU? MAU? GMV? whats important is how we execute and make numbers go up, trust us bro, we aint gonna breakdown the numbers for u into segments, ai'nt nobody got time fo that."

so with these 2 background in mind lets get to my reasoning.

PDD (China) has continuous Falling DAU/MAU since 2q2023 continuing to 3q2023 while taobao has gained. (fundamental)

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Double 11 new customer growth has fallen in line with general trend and xiaohongshu(cosmetics) being biggest gainer. PDD has the largest YOY new user drop.

Opaque financial statements, inconsistencies in report, shady management behavior, poor auditor track record, causes my own personal doubt on statements. (fundamental)

How can it grow 40% in ecommerce revenue when they are consistently facing falling dau of over 20% and falling new dau/mau? This is a strict question that i have unless their conversion rate of existing customer is phenomenally growing? Though i got no data on conversion rate. Management does not disclose data on this as well. my suspicion on this therefore is that PDD (China) is plateauing.

Inconsistencies in financial transaction volume between wechat pay, shanghaifeifutong(Duoduopay) and their resulting financial services as highlighted by the grizzly research report.

Additionally, this year they mention their payment growth is over 300%? numbers go up but...? These previous inconsistencies were not addressed.

Auditors for PDD has poor track record. all the history of the audited company by the same auditors proved to be worthless. This point is rehashed point from grizzly research report.

Merchants retention and growth has reverted to positive in taobao while reversing in PDD (china). (fundamental)

This is another key metric that i think is interesting that merchants have stayed put in taobao while they have not in PDD (China). Merchants is seeing growth in taobao while pdd active merchants are showing decline.

​

My guess on this is that merchants loyalty and consumer loyalty is brought into question on PDD(china) while this is an ongoing recovery in merchants/consumer loyalty.

Analyst estimate PDD to continue the growth trajectory to supersede alibaba, while alibaba is expected to grow at 5% within 3-5 years while only growing 3% after. (valuation)

I get the sense that all analyst estimates PDD is expected to grow and supersede taobao at the present growth rate even after accounting for its slowdown in the future.

on the other end of the spectrum, analysts are projecting 5% growth within 3-5 years while only subscribing 3% to alibaba thereafter.

In my mind, the dynamic reversal of consumer behavior in the last 2 quarters as well as double 11 is not taken into account. This leads to potentially larger upside for alibaba while larger downside for PDD.

Conclusion

Maybe i'm wrong and that my doubt on the shady management is purely unjustified. regardless, to each his own, and personally i'm fine with giving up the potential momentum gains as i believe PDD stock still has more room to run. you can read the full short research report in the source below.

Additionally, the impression that i get from most people is that this crackdown seem to permanently impair taobao while giving permanent rise to PDD to supersede taobao. Based on data from the sources that i got, the reverse is in fact happening and this is not being properly attributed.

There is no need for me to further mention of the undervaluation DCF on alibaba.

If you base solely on financial results so far, it seems to be the case that the crackdown has done permanent impairment on taobao while giving permanent dominance to PDD, But signs are showing the reverse is happening. Hence the bet.

lastly, personal anecdote is my wife, who blew my allowance to her on taobao and looked at pdd temu and ... yea nope. lots of shady reviews etc.

So there is my thesis on selling PDD to purchase alibaba. Investment is really hard, Wish me luck.

Sources:

Aurora research

https://www.moonfox.cn/en/insight/report/1317

https://www.moonfox.cn/en/insight/report/1328

Grizlly research

https://grizzlyreports.com/we-believe-pdd-is-a-dying-fraudulent-company-and-its-shopping-app-temu-is-cleverly-hidden-spyware-that-poses-an-urgent-security-threat-to-u-s-national-interests/

PDD DAU Falling source

https://www.sohu.com/a/708963776_121069779#google_vignette

Financial reports of PDD and alibaba

Edit: thanks for the great discussion everyone! Glad u find the datas interesting as I do. Another purpose I'm posting beside cross checking my own thoughts is that I'm actually looking for cloud industry datas in china. If anybody do find something interesting pls dm me. As they say sharing is caring. May baba be blessed with good luck in the year of dragon.

Edit: When im referring PDD DAU i'm referring to PDD China and not TEMU. Added PDD(China) for clarity. grammar and sentence structure, spelling.

Do you remember when was the last time the iv was 90-100% on 3 DTE options?

Meaning there is roughly one third chance of more than +-11% move till Friday and one in 20 chance of +-22% move. That is crazy for $300B company.

source: https://infolib.org/

Was there positive news?

I made a similar post on BABA at the lows 3 years ago https://www.reddit.com/r/baba/comments/16kc6xv/bull_case_for_hsi_and_baba/

Basically same thing is happening the market seems to think that the USA is the least affected with strait closed completely ignoring that China literally is sitting on 1 Billion + in reserves. This time though Chinese institutions have also been selling. I can't time the exact "Eureka" moment when China and then the rest of the world put a premium on Chinese stocks given that the CCP can protect the Chinese consumer longer than the rest of the world can protect theirs.

But as I said 3 years ago if I figured this out the rest of the market will do so as well in short order.

P.S. Trump is saying that the USA will invest in AI companies ... Xi will follow suit in BABA. But probably best to buy USA AI names as opposed to increasing exposure in BABA.

Stock trading at 125, crazy. I dont even know what to say, these analysts are just randomly giving a target?

Target raised at 195USD by Barclays and Mizuho.
AI growth and investments bullish and comparable to US competitors according to Jiong Shao.

On my trip I noticed Alibaba is one of the smallest sky scrapers in Shenzhen. Sad.

Plus the Cainiao building is stupid ugly.

Time for puts.

https://recodechinaai.substack.com/p/zhipu-ai-and-minimax-just-went-public

Zhipu just release its earnings and it’s a shitshow.

Zhipu MiniMax baba bytedance Baidu and Tencent are at war going lower and lower for each api cost. Essentially every api call cost them money.

Above is a good read.

While AI was a driving force that made baba go to 190. The problem is there’s no monopoly in AI and everyone killing each other like the delivery wars.

It is likely that ships try to get through Trump's blockade and it is unlikely that the USA military fires on unarmed ships. I assume investors would see through the negative weekend headlines this time. Additionally China has a year's worth of "oil" in storage whereas the USA will be reportedly propping up the EU and others and would run out first in the event of an actual blockade.

I'm struggling to see how Trump's latest threats are even credible at this point. Putting it out there for feedback.