The stock of the unicorn Pinduoduo Inc. (Nasdaq: PDD) soared more than 40 percent Thursday as it lifted off with fanfare and raised $1.6 billion in one of the largest initial public offerings in New York by Chinese companies in four years.
Pinduoduo, a three-year-old social discounter platform became a publicly traded company just before noon today as it sold 85.6 million American depositary shares at $19 apiece, at the top of the expected range.
By late afternoon, its stock was trading up $7.66 at $26.66 per share.
By 2 p.m. in New York, the stock of Pinduoduo was at $26.66 per ADS, up more than 40 percent.
(Source: Thomson Reuters Eikon)
In its pre-IPO period, Pinduoduo briefly raised its offering price to $22.8 per ADS after its stock sale was oversubscribed 20-fold, according to local media. The 20 percent increase in pricing would have raised the valuation of the Facebook-Groupon mashup to $28.8 billion.
Since 2015, when an ex-Google engineer, Zheng (Colin) Huang, founded Pinduoduo, the company has grown rapidly, rivaling e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) in China's smaller cities.
In the company's prospectus, Huang said the company strives to combine the principles of "Costco" and "Disneyland," bringing together value-for-money and entertainment, through a decentralized network and social interaction.
The company is backed by Chinese tech giant Tencent Holdings Ltd., which acted as one of the cornerstone investors in the IPO, committing $250 million.
Pinduoduo said it plans to use the proceeds from the IPO to expand its business operations, for research and development, and general purposes.