Alibaba Group Holding Ltd – ADR (NYSE:BABA) shares are trading lower by 4.58% to $81.50 Monday morning following the release of second-quarter earnings by its competitor, PDD Holdings Inc – ADR.

What Happened: PDD's earnings report highlighted impressive year-over-year revenue growth, but management also underscored challenges that could have broader implications for Alibaba's business strategy and market position.

PDD reported an 86% year-on-year revenue growth for the quarter, reaching $13.36 billion. Despite this growth, the revenue figure missed analyst expectations of $14.02 billion. PDD's adjusted earnings per American Depositary Share (ADS) of $3.20 meanwhile surpassed the consensus estimate of $2.73.

Commentary From Leadership: Lei Chen, Chair and Co-CEO of PDD Holdings, acknowledged the progress made but also highlighted looming challenges: "While encouraged by the solid progress we made in the past few quarters, we see many challenges ahead." This points to potential hurdles that could impact future growth, an indication that the competitive landscape is intensifying.

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Jun Liu, Vice President of Finance at PDD, added to this cautious outlook, stating, "In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges."

Liu's comments specifically hint at a more competitive environment that could impact not just PDD but also other major players like Alibaba.

Impact On Alibaba: PDD's significant growth, particularly in transaction services, may suggest its taking market share from Alibaba. Alibaba has long been a leader in China's e-commerce market, but PDD's rapid growth suggests that it is becoming a formidable competitor. The competition is not just in e-commerce but also in areas like online marketing services, where Alibaba has heavily invested.

Additonaly, PDD's ability to rapidly scale its revenues and its massive cash reserves ($39.2 billion as of June 30, 2024) provide it with the resources to continue its aggressive expansion.

This could put pressure on Alibaba to innovate and invest more heavily in customer acquisition and retention, potentially compressing margins.

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How To Buy BABA Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Alibaba's case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, BABA has a 52-week high of $96.68 and a 52-week low of $66.63.