The recent frenzy surrounding the stock options of PDD Holdings (PDD  ) has raised eyebrows among market observers. The latest developments suggest that a considerable portion of investors are betting on a bearish market sentiment.

What Happened: Whales, or wealthy investors, have shown a noticeably pessimistic stance on PDD Holdings, even though it recently beat rival Alibaba Group Holding Ltd. (BABA  ) to become China's most valuable e-commerce company.

An evaluation of the options history for PDD Holdings revealed 25 trades. 48% of these investors opened trades with bullish expectations, while the remaining 52% demonstrated a bearish outlook.

"Temu may not be able to offer its current low prices indefinitely, which could result in the erosion of its key value proposition," wrote Morgan Stanley analysts in a recent report entitled "The Temu Effect."

"The data could suggest Temu is 'burning through' new shoppers without generating stickiness after initial trials on the platform," the note further read.

However, a few other analysts hold an optimistic view of PDD in the coming years, expecting it to become profitable.

After going public on the Nasdaq in 2018, PDD's shares dived, falling below the IPO offering. However, it persevered and increased its revenue by expanding to smaller cities in China and beyond its borders. In 2022, PDD clocked a revenue of 131 billion yuan ($18.26 billion), compared to a revenue of 94 billion yuan ($13.10 billion) made in 2021.

Why It Matters: This development comes in the wake of a call for a strategic shift from Alibaba co-founder, Jack Ma. After stepping back from Alibaba's daily operations in 2020, Ma recently praised PDD Holdings for their strategic decisions on the company's internal forum. These decisions have enabled PDD Holdings to seize market share from Alibaba, China's leading e-commerce platform.

Alibaba is currently facing a period of turbulence, grappling with a slower economic revival and the rise of competitors like PDD Holdings and ByteDance Ltd. Recent organizational changes, such as CEO Daniel Zhang's resignation and the delay of its anticipated cloud division spinoff and listing, have further complicated the situation.

Price Action: Alibaba's ADR stock is down -21.57% this year, while PDD's is up 64.39%, according to data from Benzinga Pro.