Chinese E-Commerce Player Pinduoduo Joins Nasdaq-100, Shortest Achiever in History

Pinduoduo went public in the US on July 26, 2018
Pinduoduo went public in the US on July 26, 2018 (Source: thepaper)

Pinduoduo Inc. became a component of the Nasdaq-100 Index (NDX) on Monday, joining the likes of category-defining companies like Apple, Microsoft, Alphabet, Intel and Facebook on one of the world’s preeminent large-cap growth indexes.

It is the youngest constituent of the index, also it has the shortest time from inception to inclusion in Nasdaq’s history.

Jessica Li, a venture capital investor based in the US, said that Pinduoduo can achieve this in such a short time because of its early market entrance as the company was the first exposure that many Chinese people had to e-commerce. This created a massive opportunity for the company and has proved to provide long-term life time value for Pinduoduo.

What’s more, its expansion into previously untouched markets and sectors such as agriculture that have not been disrupted for generations, and locations like 2nd and 3rd tier cities that had previously seen little innovation, leveraging network effects such as team buying, and multiple collaborations across the ecosystem have all contributed to its fast listing on the Nasdaq-100 Index, according to Li.

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Li said the listing on the Nasdaq-100 Index is only the beginning for Pinduoduo. “There are so many new verticals, locations in China, and maybe eventually in Asia and worldwide, that PDD can expand to. They may be in a better position to hire more talent, attract more partners, have more brand awareness, and raise more capital to achieve their goals.”

Li said Pinduoduo is an excellent precedent for Chinese companies that want to file for an IPO on Nasdaq.

“I think and hope this will be a step toward greater cross country collaboration and global harmony,” Li said. “People will begin to focus less on country boundaries and focus more on great companies in general, regardless of their headquarters or location. More people will learn from each other and work together toward creating a better world.”

The Nasdaq-100 includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization. But it’s not just financial metrics that set Nasdaq-100 companies and the NDX apart. According to its website description, companies included in the Nasdaq-100 are also trusted brands, leaders in ESG and recognized for their ethics and diversity.

Last week, Pinduoduo announced its unaudited financial results for the second quarter ending June 30.

Total revenues in the quarter were 12.19 billion yuan ($1.73 billion), an increase of 67% from the same quarter of 2019. Active buyers in the twelve-month period ending June 30 were 683.2 million, an increase of 41% from 483.2 million in the twelve-month period ending June 30, 2019.

“We remain positive on PDD’s outlook given its ability to add 100 million users in 1H20 (after adding 100 million in 2H19),” said Morgan Stanley analyst Eddy Wang. “We believe PDD’s ‘value-for-money’ value proposition and its ability to enhance user engagement will continue to drive up purchase frequency.”

Founded in 2015, the Shanghai-based leading Chinese e-commerce player is one of the fastest growing internet companies in the world. It launched its IPO on Nasdaq on July 26, 2018.

Since listed in July 2018, Pinduoduo has delivered a more than 350% return for its investors.

“In the second quarter of 2020 we continued to devote resources to support economic recovery across China, and we witnessed great resilience amongst our merchant community,” said Chen Lei, CEO of Pinduoduo. “We also continued our investments in user engagement and expanded our promotional offerings to cover more household necessities and agricultural products based on user demand,” Chen said.