Pinduoduo Shares Slip After Chinese E-Tailer Sounds Negative Note on First Quarter
Wang Hai
DATE:  Mar 12 2020
/ SOURCE:  yicai
Pinduoduo Shares Slip After Chinese E-Tailer Sounds Negative Note on First Quarter Pinduoduo Shares Slip After Chinese E-Tailer Sounds Negative Note on First Quarter

(Yicai Global) March 12 -- Pinduoduo's shares slumped after the Chinese group-buying e-commerce platform said the novel coronavirus outbreak is likely to knock its first-quarter earnings.

Pinduoduo's stock price [NASDAQ:PDD] lost almost 7 percent yesterday in New York to close at USD35.06.

The epidemic in China disrupted online merchants' operations and logistics and Shanghai-based Pinduoduo brought in a subsidy program to support its business partners and consumers as prices of daily necessities and personal protective gear soared.

"These subsidies might impact the company's P&L and the shareholders return in the short-term," Chairman and Chief Executive Colin Huang said on a conference call after the release of its earnings report yesterday. "In the face of surging prices we felt duty bound to step in and do our part to relieve consumer anxiety and help our business partners."

The Groupon-like platform also instituted an anti-coronavirus event and set up a CNY600 million emergency fund on Jan. 23. It had given vouchers to buyers and assumed sellers' delivery costs for 180 million units of counter-epidemic protective supplies in the promotion as of the end of last month.

"The disruption caused by the outbreak will have a negative impact on our results for the first quarter of 2020, but our expectations for the long run remain unchanged and even more positive," he added.

2019 Results

For the full year ended Dec. 31, revenue gained 130 percent to CNY30.1 billion (USD4.3 billion) and the net loss attributable to holders of its ordinary shares fell 32.3 percent to about CNY6.97 billion, according to its financial report published yesterday.

Pinduoduo also posted an over twofold rise in the number of active buyers to 585 million, driven by several tranches of CNY10-billion incentives, helping to boost its gross merchandise volume to about CNY1 trillion (USD143.7 billion) last year, a new milestone, in a 113 percent gain over the year before.

"2019 was an important formative year for Pinduoduo," Huang said. "We built out our capacity -- capabilities, innovated our offerings and continue to invest in our users to enhance engagement and drive scale in our business."

Revenue from online marketing soared 91 percent to USD1.4 billion, while transacted services grew 87 percent to USD159 million, per the report.

The annual average consumption of active buyers jumped to CNY1,720.10 (USD247) each, a 53 percent increase over CNY1,126.90 a year earlier.

As an e-commerce platform building up from third- and fourth-tier cities and a rural user base, Pinduoduo still needs to solve the logistics problem of the 'last mile.' The company's outlays on research and development tripled to CNY3.9 billion last year, with that expenditure mainly going toward online sales of agricultural products, the report said.

Its people are the e-retailer's most valuable assets, Huang added, and the firm has therefore decided to give the vast majority of its staff pay raises.

Editor: Ben Armour

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Keywords:   Pinduoduo,Novel Coronavirus Pneumonia