Pinduoduo Stocks Drop Despite Revenue Exceeding Wall Street Expectations

Pinduoduo released its full-year financial report on Mar. 13. The Shanghai-based Chinese e-commerce company, which has been likened to Groupon, exceeded market expectations in terms of revenue but missed earnings estimates, which sent shares lower by 17 percent after the opening bell.

SEE ALSO: Ep. 17: Pinduoduo: From Zero to $23B in Three Years

According to Wall Street estimates, the company revenue was expected to reach 5.3 billion yuan ($790 million). Instead, the total revenue reached new heights at 5.7 billion yuan ($850 million) in Q4, a 379 percent growth compared to the same period last year and a 68 percent increase compared to the previous quarter. The annual revenue was 13.1 billion yuan ($1.95 billion), a year-on-year increase of 652 percent.

The better-than-expected revenue was a result of the company’s increase in active users. Pinduoduo reported that average monthly active users grew by 93 percent to 272.6 million from the same quarter last year.

“We had a strong finish to 2018 in the fourth quarter,” Zheng Huang, Pinduoduo‘s founder, chairman, and chief executive officer, said. “GMV in the last twelve months increased 234 percent year-over-year to 471.6 billion yuan. This was driven by the rapid growth in our annual active buyer base and a near doubling in the annual spending per active buyer. We view this as an indication of users’ growing trust in our platform, and will keep on innovating to satisfy our users’ evolving needs so they can have the best user experience possible.”

Despite beating analysts’ estimates on revenue, shares in Pinduoduo tumbled 17 percent on Wednesday, to $25.3 per American depositary share, after the discounter platform reported a net loss of $352.5 million, or 32 cents per share, compared with income of $2 million in the preceding year period.