Pinduoduo Falls Most Since IPO After Worse-Than-Expected Third-Quarter Earnings
Liao Shumin
DATE:  Nov 21 2019
/ SOURCE:  yicai
Pinduoduo Falls Most Since IPO After Worse-Than-Expected Third-Quarter Earnings Pinduoduo Falls Most Since IPO After Worse-Than-Expected Third-Quarter Earnings

(Yicai Global) Nov. 21 -- Pinduoduo's stock price slumped the most since it went public in July last year after China's third-largest e-commerce platform by sales posted weaker-than-expected earnings for the third quarter.

Shares of the bulk-buy platform owner [NASDAQ: PDD] tumbled by 23 percent to USD31.40 yesterday. The Shanghai-based firm raised USD1.6 billion in one of the largest initial public offerings of 2018, pricing its shares at USD19.

Pinduoduo's loss widened to CNY2.3 billion (USD326.5 billion) over the quarter from a year ago, the firm said in its earnings report released yesterday before the market opened. Its revenue rose by twofold to CNY7.5 billion.

Pinduoduo competes against e-commerce giants Alibaba Group Holding and JD.Com -- both of which reported promising sales over China's Black Friday-like Singles Day shopping festival earlier this month. Pinduoduo did not release its sales figures, citing its focus on user experience.  

Enlarged spending on marketing, as well as on technology-related research and development partly explains Pinduoduo's widening losses. Sales and marketing expenses more than doubled to CNY6.9 billion while spending on tech R&D rose more than threefold to CNY1.1 billion. 

"We continued to invest in our users throughout the third quarter, and stepped our marketing up a notch from the second half of September for the launch of our anniversary sale," Chief Executive Zheng Huang said in the report.

Boosted marketing efforts have been fruitful as the firm logged the biggest increase in monthly average user numbers since going public. Its MAU edged up 85 percent to 429.6 million from a year ago. 

However, not every user ended up buying products on the platform. The number of active buyers only rose by 39 percent to 536 million. Still, the ones who did end up buying something used more money. During the 12 months ended September, each spent CNY1,567 (USD219) on average, an increase of 75 percent from a year earlier.   

Editor: Emmi Laine

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Keywords:   Pinduoduo,Active User,NASDAQ: PDD