Pinduoduo Inc. (PDD) shares though lost -6.80 percent on Tuesday but Chinese online retailer added more than 28 percent to $132.37 over the past 5 sessions for posting better-than-expected quarterly results.
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In the third quarter, Pinduoduo’s revenue was $2.09 billion, a year-on-year rise of nearly 90 percent. For the 12-month period ended September 30, the overall gross amount of products sold on the platform rose by 73 percent to $214.7 billion. The number of average monthly active users increased to 643.4 million people by 50 percent, which shows the continued growth of the consumer base of the company. The special business model of the company, which allows users to build shopping clubs with friends and family members to save money, was one of the drivers of the increase in the number of customers.
Pinduoduo’s return to profitability by reducing marketing expenses was important news for investors. Adjusted earnings per share were $0.05 in the reported quarter, compared to a loss of $0.22 per share in the third quarter of last year.
The share price of Pinduoduo may also be helped by news of a powerful Single Day in China. Traditionally, the largest Chinese online retailer Alibaba organizes the so-called Single Day on November 11-the discount time. This day has generated more customer activity in recent years than in the United States on events like Cyber Monday or Black Friday. Single Day began a little earlier this year and Alibaba and JD.com has racked overall gross sales of more than $115 billion.
In terms of the number of active users, Pinduoduo with 643 million users is behind Alibaba whose active user count is 757 million. However in China and beyond, both platforms benefit significantly from high consumer activity. Despite the fact that China has managed to contain the spread of COVID-19, online shopping is still favored by many customers. Sale of luxury products also remained well during that period.
