Pinduoduo Shares Plummet 17% Amid Bold Strategic Shift to Bolster Merchant Support

Pinduoduo Inc. recently faced a steep decline in its stock price, dropping by over 17% on May 27 following the release of its unaudited financial results for the first quarter of 2025. The company's revenue for the quarter was reported at 956.7 billion RMB, marking a 10% year-on-year increase, yet failing to meet market expectations. Concurrently, net profit attributable to common shareholders saw a significant decrease of 47% to reach 147.42 billion RMB.

The company attributed this downturn to its aggressive investment in high-quality development strategies. Pinduoduo has transformed its previously launched "Hundred Billion Yuan Subsidy" initiatives into a "Trillion Yuan Support" plan, aiming to shoulder the pressures felt by its merchants amid evolving market dynamics. Chairman and co-CEO Chen Lei emphasized the long-term vision of Pinduoduo, stating that substantial investments are necessary, even at the cost of short-term profitability, to support their merchants and stabilize the market environment.

From an operational standpoint, Pinduoduo's revenue from online marketing services grew by 15% to 487.22 billion RMB, highlighting the increasing value of the platform’s user traffic. However, its transactional services revenue rose by only 6% to 469.5 billion RMB, reflecting a slower growth rate, partly due to shifts in their cross-border business' monetization strategies.

Despite the immediate financial setbacks, Pinduoduo is steadfast in its commitment to reinforce the merchant community. Zhao Jiazhen, executive director and co-CEO, affirmed the plan to expand support from larger merchants to include small and medium-sized businesses, emphasizing the necessity of substantial investments to drive long-term reforms and quality improvements across industry sectors.

Moreover, Pinduoduo's initiatives extend beyond financial support, incorporating advancements in digital agriculture. The establishment of the "Digital Business Farming Technology Courtyard" in Yunnan, supported by Pinduoduo, is one such initiative. This project focuses on integrating digital commerce with training for new-age farmers, supporting agricultural research, and helping bring premium agricultural products online.

Overall, Pinduoduo's aggressive strategic pivot, while currently affecting its financials, aims at fortifying its long-term market position and enhancing value for both consumers and merchant partners. As the company navigates these challenging market conditions, its dedication to broader industry transformation remains a critical focus point.