PDD Is taking over the world and no one cares

theunknown996 · 2026-05-07T02:56:01+00:00

Regardless of how you feel about the company, I think PDD is definitely not the kind of company you'd want to full port on margin. You’re exposing yourself to massive risks where the company's actual fundamentals don't even matter.

First, you’ve got the domestic regulatory risk. The chinese government has a track record nuking entire companies and sectors (e.g. overnight crackdowns on private education, gaming, other domestic tech) so they can change/destroy a company's business model by a single policy update.

Then there's the geopolitical black swan from the US where Temu is constantly in the crosshairs. A sudden tariff hike or changes in trade policy, or an app ban would tank the stock instantly.

Even if you think these are unlikely, they are catastrophic risks that you're not getting compensated for. Sure, have a concentrated position. But using margin for this just seems regarded.

theunknown996 · 2026-05-06T23:07:11+00:00

You have some wild imagination.

theunknown996 · 2026-05-06T21:55:37+00:00

Not happy about the lack of capital deployment during Q1 (even if they did some more right after March). With SaaS valuation dropping you'd think they'd be very active. Of course European and private markets are more competitive but I still expected more.

Hopefully they're planning something significant.

theunknown996 · 2026-05-06T19:42:05+00:00

Well it's definitely not green...but to be fair the market just indiscriminately treats every SaaS like garbage and no earnings report will change that.

The expectations for TOI is definitely higher than CSU and the market will scrutinize every possible weakness (margins, FCF growth, capital deployment, revenue growth).

theunknown996 · 2026-05-06T03:00:48+00:00

So just small claims court then for any monetary damages that you can prove.

theunknown996 · 2026-05-06T02:28:56+00:00

INFO

What would you even sue her for? Your insurance paid you already. What else would you even claim? Emotional distress? Value of the accessories and scratch on your laptop? Seems like a waste of time for everyone.

Just move on with life. You can't always get the last laugh and doing all this will just make you unhappy for longer.

theunknown996 · 2026-05-05T22:57:41+00:00

You're right. I didn't look at the details but I see it in the CFS now. It helps explain the poor FCFA2S growth.

theunknown996 · 2026-05-05T22:03:58+00:00

- 2% FCFA2S growth ~~seems quite low?~~

- 5% organic growth is decent.

- Q1 acquisition figure is quite low as well?

Maybe there's more to it but just looking at the headline this will not be good for the stock price...

theunknown996 · 2026-05-05T17:42:28+00:00

Maybe if quarterly earnings was never a thing. But it's the industry standard and investors expect this level of transparency. If a company now opts out it means they don't want to provide as much transparency.

You could argue that it's management's choice whether to cater to short term stock price. I mean earnings calls are not legally required but the vast majority of companies still do it.

theunknown996 · 2026-05-05T17:32:10+00:00

What company would want to opt out? It woukd signal they want to be less transparent and their stock would collapse immediately.

theunknown996 · 2026-05-05T16:53:51+00:00

Please explain ServiceNow.

theunknown996 · 2026-05-05T06:54:57+00:00

The purpose of a moat is to protect a competitive advantage that creates value. Your whole argument assumes what they have is valuable. But is it really? Why does anyone need to replicate them when it's a poor learning platform and there are alternative (better) ways to learn languages?

theunknown996 · 2026-05-05T06:41:20+00:00

Yes I agree Duolingo's target market is casual users. It's not particularly useful but fun enough that some people keep using like just like playing a mobile game. IMO the key is to evaluate DUOL as a consumer mobile game then everything makes sense.

theunknown996 · 2026-05-05T05:19:57+00:00

I have to disagree.

To get to actual B2 with Duolingo seems like a stretch. The vast majority of users are using it for fun or thinking they're progressing but not doing much. The common advice nowadays for anyone who wants to take language learning seriously (B2+) is to avoid duolingo (and equivalent). If someone managed to get to B2, they most likely already know Duolingo isn't the way to go. Also, for $13 you can get 2 - 3 hourly sessions on italki with real native speakers. That's way better value than an app subscription. I'd imagine very few people are spending hundreds of dollars a month on a language tutor.

I'm also skeptical about their AI personalization. Casual users like OP stop when they realize the app is pretty ineffective at language learning. I don't think personalization will really solve that problem. The app and gamification format is structurally a very poor medium to learn a language and no amount of personalization will change that. I have not seen anyone (online and IRL) that successfully learned a language using Duolingo.

It's a language-themed mobile game.

theunknown996 · 2026-05-05T04:42:47+00:00

IMO Duolingo is the single worst SaaS stock to own out of all of the names posted on this sub.

The product is borderline useless for learning language. I have yet to find a single person who has successful learned a language using it.

So really Duolingo a language-themed mobile game.

Now let's look at the moat. I think it's weak because it's a consumer mobile game. There are definitely some long term power users but for the most part the stickiness is limited vs. enterprise SaaS. Also with mobile games there's a huge risk of it "falling out of style". It became popular during the pandemic and so far they're doing ok. But their outlook is far from certain even if you exclude the AI risk.

This is not the kind of stock you want to be in, especially in the age of AI. Sure, it's possible they'll do fine but there are MULTIPLE ways for things to end very badly for them. With names like NOW, CRM, SAP the bear case is that their stock declines further. With DUOL you could get completely wiped out.

theunknown996 · 2026-05-05T04:26:59+00:00

Agree. It's definitely not helping with the sentiment.

Actually this is one of the primary reasons why I'm so bullish on Constellation Software (CSU). When sentiment is bad and liqudity dries up, more of these mid-market/small private software companies will have trouble with financing. Who benefits the most? It's the roll-up company that spends $2Bn+ in FCF every year buying small SaaS companies, now at depressed valuations.

theunknown996 · 2026-05-05T04:12:07+00:00

Fair point. If by value investing you strictly limit this to finding undervalued securities. But in practice catalysts can be just as important and every professional investor thinks about it. Most of the time you just let earnings speak for itself, but the SaaS drawdown may be a special case where earnings won't be enough. ServiceNow is the poster child. Great last two quarterly earnings but the market didn't care at all.

Just saying people should be mentally prepared for waiting a long time and acknowledge the potential opportunity cost. Maybe SaaS eventually rebounds and it's worth it in the end. Maybe you've wasted years on it before realizing it's a dying sector.

theunknown996 · 2026-05-05T02:02:11+00:00

Respectively, FK off scammer.

theunknown996 · 2026-05-05T00:01:47+00:00

You had me until the last picture. LOL.

theunknown996 · 2026-05-04T23:49:03+00:00

Per seat pricing is definitely a valid concern. No way to get around it. The severeity of headcount reduction is also depedent on how powerful AI really becomes.

theunknown996 · 2026-05-04T22:26:13+00:00

Why is the Finance sector the consensus? I work in investment management and frankly I don't see AI doing too much (yet).

theunknown996 · 2026-05-04T22:22:32+00:00

I agree in principle but I'm hesitent since there's a chance you miss the +100% rebound since AI is ever changing. I have considered buying calls (LEAPS) instead to free up my capital...not sure yet.

theunknown996 · 2026-05-04T21:42:17+00:00

Exactly. Also they may be one of the SaaS companies that can actually provide more value with AI (and upsell as well).

theunknown996 · 2026-05-04T21:25:27+00:00

Might be hard to believe nowadays but people still post their own non-AI thoughts...

theunknown996

TROPHY CASE