Biz / Tech

Group discount platform sees share jump following NASDAQ debut

Shares of Pinduoduo jumped as much as 40 percent on its NASDAQ debut Thursday as investors embraced the booming social e-commerce platform.

Shares of Pinduoduo jumped as much as 40 percent after its NASDAQ debut on Thursday as investors embraced the booming social e-commerce platform.

"We're still at the beginning of contributing to the booming group-purchasing e-commerce model," founder and chairman Colin Huang said in a speech in Shanghai before the bell ringing ceremony on Thursday night.

Tencent-backed shopping platform Pinduoduo priced its initial public offering at US$19 per share and raised US$1.87 billion. Shares closed at US$26.7 and advanced a further 5.92 percent in after-hours trading.

It invited 39 consumers to participate in a simultaneous remote bell ringing ceremony in New York and Shanghai on Thursday.

The group-buying site has quickly drawn consumers who are seeking discounts of up to 90 percent. It currently connects with 344 million shoppers and 1.7 million vendors.

Huang told an interview ahead of the listing that it will gradually add more products which connect with consumers in first tier cities.

"As people spend more time on social media instead of actively searching for online shopping information, we will have huge growth potential by linking products with buyers," he said.

Thanks to a huge user base which has been largely accumulated through Tencent's social media platform WeChat, the three-year-old Pinduoduo has been quickly catching up with top e-commerce firms including Alibaba's Taobao and JD.com.

The Pinduduo application allows users to participate in group buying deals with large discounts of up to 90 percent by spreading the deal to friends and contacts through the social networking platform.

But the fast-growing model has also drawn debate about whether it can be sustainable when consumers are just searching for the lowest possible prices.

Jason Ding, Partner at Bain & Company and Bain’s head of Consumer Products, Retail and Digital practice in China, said that Pinduoduo did successfully attract consumers who were not familiar with online shopping in the very beginning, and that the management team will put more thinking into turning it into a sustainable business model.

“Despite its high transaction volume and exponential growth in the early stage, how Pinduoduo can retain shoppers who have been attracted by deep discounts and turn them into long-term loyal consumers remains a question if product quality and shopping experience can not be guaranteed,” Ding noted. 


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