Pinduoduo Soars 12% as It Crushes Wall Street Estimates

China's third-largest retailer enjoyed a better day compared to its rival Alibaba.

Anthony Russo
    May 22, 2020 11:20 AM  PT
Pinduoduo Soars 12% as It Crushes Wall Street Estimates
author: Anthony Russo   

Shares in Pinduoduo Inc. (Nasdaq: PDD) surged nearly 12% by midday Friday after the company beat Wall Street's revenue estimates for the first quarter.

In a statement today, the Shanghai-based online retail giant said its revenues hit $923.8 million, up 44% year-over-year. Although its adjusted loss came in a little higher than expected, at 39 cents per share, its revenues far exceeded Wall Street's expected $741 million. 

Pinduoduo said it had 487.4 million active users in the quarter, representing a year-over-year increase of 68%. 

"We remain committed to our users, merchants, and ecosystem partners during this difficult period," Zheng Huang, the chairman and chief executive officer of Pinduoduo, said in a statement today.

He added, "In the first quarter, we adopted numerous measures to support them, including providing free traffic to farmers and small businesses, and stabilizing the prices of medical and other daily necessities that were in high demand."

Meanwhile, PDD's e-commerce rival, Alibaba Group Holding Ltd. (NYSE: BABA; HKEX: 9988), announced today that its revenues in the trimester rose 22% year-over-year to $16.14 billion. However, its profit tanked 88% year-over-year because of an investment loss of $1.09 billion during the quarter. Also dampened by the intensifying trade war, Alibaba's stock in New York plummeted 5% by midday Friday to $200.97 per share. 

As of intraday, shares in Alibaba are down 7% year-to-date, while Pinduoduo has seen its stock skyrocket 74% YTD. 

As of May 2019, Alibaba has been the leader by a wide margin in China's e-commerce space with a market share of 56%, according to Statista. Pinduoduo clocked in third behind Inc. (Nasdaq: JD), at 7%.

(Source: Statista)

While it did not provide guidance for the second quarter, Pinduoduo sees growth opportunities as China is increasingly turning to online shopping.

David Liu, the vice president of strategy for Pinduoduo, said in a statement today, "As the economy worldwide regains its foothold, we are seeing opportunities for investments and partnerships such as our recent investment in GOME Retail Holdings. Our strong balance sheet allows us to act quickly on such opportunities which we believe would help us better serve our users."