By Senad Karaahmetovic
Shares of Pinduoduo (NASDAQ:PDD) are up over 11% in premarket Monday after the Chinese internet company crushed analyst estimates for the second quarter.
Pinduoduo reported revenue of 31.44 billion yuan to smash the analyst estimate of 23.62 billion yuan (Bloomberg consensus). The adjusted earnings per American depositary receipt came in at 7.54 yuan, while the consensus stood at 2.75 yuan.
The company said in a press release that it witnessed a recovery in consumer sentiment in the second quarter of the year.
A Citi analyst took note of a “very strong quarter” that resulted in a “substantial” top and bottom line beat.
“We believe the strong online marketing revs beat was likely driven by ad budget deployment by brands and merchants during 6.18 promotional period to leverage PDD’s large user base platform with targeted effort to help clear inventory or catch up on lost sales during the April and May Shanghai lockdown. The significant profit beat also reaffirmed the high operating leverage of PDD’s marketplace model, especially with high margin advertising marketing revs,” the analyst said in a client note.
A JPMorgan analyst also noted “strong” results.
“The beat is too strong to ignore if even some discount is considered,” the analyst wrote in a note.
“We still believe there’s decent upside to PDD's share price in the next 3-6 months.
”Similarly, a Goldman Sachs analyst reiterated a Buy rating and a $95 per share price target on PDD shares.
He remains bullish on the company given “its unique value proposition as a marketplace with gamified features, value-for-money offerings, and as China's largest online agriculture platform with 16mn+ farmers on board and increased investments into agricultural supply chain and technology with the highest DAU/MAU ratio amongst all China eCommerce platforms (indication of stickiness & high purchase frequency of its users),” the analyst wrote in a client note.