Biz / Tech

Pinduoduo reports mixed financial results

Ding Yining
Revenue surged 123 percent for the group-buying platform, although net losses more than doubled due to higher marketing and promotional spending.
Ding Yining
Pinduoduo reports mixed financial results

Shanghai-headquartered group-buying platform Pinduoduo said revenue jumped 123 percent to 7.51 billion yuan (US$1.07 billion) with increasing advertising demand from merchants and annual spending per active buyer.

But Pinduoduo shares sank more than 20 percent to US$31.4 on NASDAQ on Wednesday after net losses more than doubled to 1.66 billion yuan (US$232.3 million), missing previous estimates due to higher marketing and promotional spending.

Gross merchandise volume in the 12-month period ended September 30 added 140 percent to 840.2 billion yuan following the introduction of big brands such as Dyson and La Mer.

Annual active buyers by the end of September added 39 percent from a year ago to 536.3 million.

The company also provided heavy subsidies for big-ticket items such as Apple products and home electronics to acquire buyers and build trust for more frequent purchases, according to the company.

Founder and CEO of Pinduoduo Colin Huang said buyers in first-tier cities are spending well over 5,000 yuan on an annualized basis with the introduction of many branded products.

But some doubt whether this momentum will last with less subsidies in the future as competition intensifies between Pinduoduo and market leaders Alibaba and JD.

BoCom International said it expects a bright outlook for gross merchandise volume backed by user expansion and continuous spending growth. It put a target price of US$52 per share.

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