Pinduoduo Stock Surges 21% on Impressive Q3 Sales

China's No. 3 e-commerce giant wowed investors and analysts with impressive growth.
Anna VodNov 12,2020,16:38

Shares in Pinduoduo Inc. (Nasdaq: PDD) skyrocketed 21% Thursday morning on 89% year-over-year revenue growth in the third quarter.

The e-commerce platform, one of the largest in China, said in a statement Thursday morning that its revenues surged to $2.1 billion in the three months through September. Average monthly active users, meanwhile, reached 643.4 million – a 50% increase from the third quarter of 2019.

The results were driven by Pinduoduo’s increased investments in user engagement during the quarter, chief executive, Lei Chen, said in the report.

“Our strategic priorities are informed by the changes in consumer habits that we observe and anticipate. We continue to innovate in order to meet such needs, especially in the agricultural industry,” Chen stated.

In addition, Pinduoduo enjoyed a significant rise in its marketing services. Specifically, revenues in this segment soared 92% to $1.9 billion, thanks to increased ad demand from merchants selling on the platform.

Pinduoduo also noted a 27% jump in annual spending per active buyer in the 12-month period through September.

Costs of revenues, meanwhile grew 78% year-over-year to $480.2 million and operating expenses were up 45%, reaching $1.8 billion, according to the report.

Net loss was $115.6 million, or 10 cents per share, a 66% decrease from the same period last year.

Tony Ma, vice president of finance, noted the positive cash flow from operations and a 73% GMV growth over the past year. The company had cash, cash equivalents, and short-term investments of $6.7 billion as of Sep. 30.

The quarterly results greatly exceeded analyst estimates for Pinduoduo and sent the company’s stock to $135 per American depositary share in early trading. Just a month ago, PDD shares traded near $85 apiece. In January, before the Covid-10 outbreak, the company’s stock was at the level of $41.23 per share.

As China recovers from the pandemic and returns to normal spending habits, the sales surge isn’t over yet. November is traditionally the big sales and spending month for China as it takes part in the Singles’ Day sales festival, and Pinduoduo participates in it along with established giants Alibaba Group (NYSE: BABA; HKEX: 09988) and (Nasdaq: JD; HKEX: 09618).

JD’s stock uplifted 7% on Thursday morning to $88.23 per ADS, while Alibaba traded 1% higher, at $267.61 per share, after recent troubles.

Topics:pinduoduo, jd, alibaba