Pinduoduo stock surges after profits and revenue beats

Pinduoduo, China’s third-largest e-commerce platform by market capitalization, released its first-quarter financial results, with revenue and profits beating estimation.

Total revenue for the quarter was 23.79 billion yuan ($13.75 billion), up 7% from $22.16 billion in the same period in 2021, beating expectations of 20.61 billion yuan. The increase was primarily due to higher revenue from online marketing services and transaction services. However, revenue from merchandise sales fell 99% year over year to 43.9 million yuan ($6.9 million).

Net income attributable to ordinary shareholders was 2.59 billion yuan ($410.1 million), compared with a net loss of 2.9 billion yuan in the same quarter of 2021.

Excluding nonrecurring items, adjusted earnings per American depositary share of 2.95 yuan beat the consensus of 1.83 yuan.

Average monthly active users in the quarter were 751.3 million, an increase of 4% from 724.6 million in the same quarter of 2021. The company said it will focus on better serving its existing user base as user growth slows.

Making long-term investments in agriculture and boosting digital inclusivity will continue to be a focus for Pinduoduo’s long-term growth in order to better satisfy customer demand. “We believe that the digitalization of agriculture will unlock opportunities and efficiencies that will benefit society at large and environment,” said the company.

Pinduoduo has also slowed down aggressive marketing to control spending. Sales and marketing expenses fell 14% year-over-year in Q1, which represents 47% of total revenue and is down from 59% of Q1 last year, meanwhile, R&D expenses increased by 20%. 

Cash, cash equivalents, and short-term investments were 95.2 billion yuan ($15.0 billion) as of March 31, 2022, compared with 92.9 billion yuan as of December 31, 2021.

Pinduoduo rose 15.19% to close at $48.30 per share on Friday, with a market value of $61.07 billion.