(Yicai Global) March 14 -- Pinduoduo's share price plunged after the Groupon-like Chinese e-commerce company reported a much wider full-year loss because of a big jump in outlays on brand building and employees. 

Pinduoduo's stock [NASDAQ:PDD] fell over 17 percent yesterday to close at USD25.12. Operating income rose six-fold to CNY13.1 billion (USD1.9 billion) in 2018 from a year earlier, but its loss widened 18 times to CNY10.2 billion, the Shanghai-based company said in an earnings report.

At CNY13.4 billion, marketing expenses outstripped revenue, climbing nine-fold from the previous year. The purpose of the investment was to cultivate more user awareness through online and offline ad campaigns and promotions, the report added. Spending on admin soared 50-fold to CNY6.5 billion due to recruitment costs and expenses that accrued from equity incentives to employees.

Pinduoduo went public last July, raising USD1.6 billion after pricing its shares at the top end of the range. As Chinese startups often do, the platform has remained determined to expand business amid lackluster earnings. 

Active user numbers jumped 71 percent to 418.5 million in the 12 months ended December. Active buyers ordered on average 26.56 times, which was 51 percent higher than in 2017. These shoppers also spent an average of CNY1,126.9 (USD163.9) each, which was almost twice as much as in the previous year. Gross merchandise volume rose three-fold to CNY471.6 billion.

The rapid expansion of the user base and GMV show that Pinduoduo is creating unique value, founder and Chief Executive Colin Huang said on an earnings call.

The company will employ 500 more people to handle copyright and quality control issues, Huang added.

A former Google engineer, Huang set up Pinduoduo in 2015 to enable users of Tencent's WeChat, China's biggest social network, to buy products together with friends at wholesale prices directly from producers.

Major international investment banks including Morgan Stanley, Goldman Sachs, and UBS have given Pinduoduo's stock a 'buy' or 'overweight' rating. UBS and Morgan Stanley both gave a target price of USD37 in recent reports. 

Editor: Emmi Laine