Pinduoduo Shares Plummet 8.45% as Revenue Misses Mark Despite Strong Growth
1min read In recent developments, Pinduoduo (PDD) announced its financial results for the third quarter of 2024, which reflected a revenue and earnings miss, causing concerns among investors and leading to a drop in its stock price.
The company reported total revenues of RMB 993.5 billion, which represents a 44.32% year-over-year growth, but fell short of the anticipated RMB 1,028.3 billion. Net profits stood at RMB 249.8 billion, marking a 60.78% increase. However, this underperformed market expectations alongside an adjusted EPS of RMB 18.59, against a forecast of 20.19.
According to the financial report, the shortfall in expectations has affected its stock performance, with a significant dip during pre-market trading and continued pressure post-market opening. Despite a slight recovery, the shares closed down by 8.45% at $106.64.
A closer analysis reveals that Pinduoduo's online marketing services and other revenue streams amounted to RMB 493.5 billion, growing by 24%. Meanwhile, transaction services revenue reached RMB 500 billion, a 72% increase, albeit both figures reflected a deceleration in growth compared to the previous quarter.
The company attributes this deceleration partially to seasonal factors and aggressive policy measures aimed at reducing costs for merchants. Notably, Pinduoduo has engaged in several initiatives to support merchants, including service fee rebates and reductions in withdrawal thresholds. These strategies are designed to foster sustainable growth, albeit at the expense of short-term revenue and profitability pressures.
During its earnings call, Pinduoduo's management emphasized the intensifying competition and the changing terrain of the e-commerce industry, marked by issues like consumer return rates. The company reaffirmed its commitment to enhancing core business capabilities and exploring new investment avenues in supply chain and ecosystem strategies, setting the stage for sustained long-term growth.
Looking ahead, Pinduoduo remains focused on its strategic initiatives like "New Quality Supply" and "E-commerce Westward Expansion," which aim to bring broader reciprocity in the supply and demand spectrum. The company has also invested significantly in agricultural development and innovation, driving forward the symbiotic relationship between commerce and technology.
In summary, despite current headwinds, Pinduoduo is steadfast in pursuing growth through ecosystem enhancement and merchant empowerment, laying the foundation for resilience and long-term value creation.