FILE PHOTO: The Pinduoduo logo is seen in this illustration photo taken July 17, 2018. REUTERS/Thomas White/Illustration
November 26, 2021
BEIJING (Reuters) -Shares in Chinese e-commerce platform Pinduoduo Inc plunged 19% in pre-market U.S. trade on Friday after the company missed quarterly revenue expectations as new outbreaks of the coronavirus hit consumer spending.
Shares of Shanghai-based Pinduoduo had already fallen nearly 54% this year by Thursday’s close as Chinese authorities have also increasingly clamped down on large tech companies to keep a check on monopolistic practices and protection of personal data.
Pinduoduo reported total revenue of 21.51 billion yuan ($3.37 billion) for the third quarter, below analysts’ average estimate of 26.59 billion yuan, according to IBES data from Refinitiv.
New clusters of COVID-19 outbreaks in China have prompted consumers to become more cautious about spending.
Chief Executive Chen Lei said on an earnings call that the company would focus more on investing in R&D. “This is a significant shift in strategy from our first five years when we were focusing much more on sales and marketing,” he said.
Natalie Wu, managing director of Hong Kong-based brokerage Haitong International, said the pre-market share price move was an overreaction. “The seemingly large miss is largely due to self-operated low-margin stuff, and marketplace GMV (gross merchandise value) growth is indeed quite resilient amid macro headwinds,” she said in a research note.
“Pinduoduo’s growth rate is stabilizing as they approach 900 million users,” she added.
U.S.-listed shares of rival Alibaba Group Holding Ltd, which slashed its annual revenue outlook earlier this month, were down 3.3%, while those of JD.com Inc were 3.1% lower before the opening bell.
Meanwhile, Chinese food delivery giant Meituan reported a fourth consecutive quarterly loss on Friday, as it ploughed more investments into expanding its various businesses.
Pinduoduo said the number of its average monthly active users during the quarter grew 15% to 741.5 million.
Net income attributable to ordinary shareholders was 1.64 billion yuan during the quarter ended Sept. 30, compared with a loss of 784.71 million yuan a year earlier.
($1 = 6.3880 Chinese yuan renminbi)
(Reporting by Tiyashi Datta in Bengaluru and Sophie Yu in Beijing; Editing by Vinay Dwivedi, Ramakrishnan M. and Susan Fenton)
Source: One America News Network
