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Pinduoduo Tanks as Revenue Falls Short, User Growth Slows

Stock MarketsNov 26, 2021 08:48AM ET
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By Dhirendra Tripathi – Pinduoduo stock (NASDAQ:PDD) plummeted by 19% in Friday’s premarket trading as user growth slowed at the e-commerce company, leading third-quarter revenue to fall short of estimates.

Average monthly active users during the quarter grew 15% to 741.5 million, a sharp slowdown from the second quarter’s 30% growth. The deceleration comes as the pandemic-fueled shopping waned and consumers returned to physical stores to shop. It was also a time when authorities in China enhanced their scrutiny of the country’s Internet giants.

Chairman and CEO of Pinduoduo Lei Chen said the company will place more focus on investments in R&D, away from the previous emphasis on sales and marketing in its first five years.

He reiterated promises made earlier to allocate all profits to the '10 billion agriculture initiative', a government-sponsored program in reducing inequality, especially in rural areas. Those comments were a reminder of the uncertainty about how much profit will ever accrue to shareholders in future.

The news was released into a market already suffering from concerns over a new strain of the coronavirus in South Africa and reports of authorities in China asking Didi to delist from the New York Stock Exchange.

Pinduoduo's third-quarter total revenue was 21.51 billion yuan (around $3.4 billion), below analysts' average estimate of 25.83 billion yuan.

Total cost of revenue more than doubled as the company paid more for processing fees, Cloud services, and delivery and storage charges.

Adjusted profit per share was 1.15 yuan and higher than estimates. The company swung to a comfortable operating profit from a loss the same time last year.


Pinduoduo Tanks as Revenue Falls Short, User Growth Slows

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