Nov 21, 2019 (China Knowledge) -
Last night Pinduoduo's shares price plummeted 22.89% to close at USD 31.40. The company's Q3 financial report released shows its revenue growth fell below market expectation which led to the big sell-off.
In contrast to its previous quarter performance, Q3's revenue reported to have RMB 7.514 bln which indicates a show down growth rate of 122%, compare to 228% and 169% in Q1 and Q2, respectively.
Moreover, Q3's net loss was as high as RMB 2.335 bln, compared with RMB 1.098 bln in the same period last year, with the loss expanding to 113% YoY. In terms of costs, including marketing, management and R&D, all had increased compared with Q2.
However, a large amount of investment has also won more customers, the Q3's average number of monthly active users of its app reached 429.6 mln, a net increase of 197.9 mln compared with 231.7 mln in the same period last year. This rapid increase in the number of users is closely related to the continuous subsidy from the company. In the Jun 18 online shopping offers, it launched an amount of RMB 10 bln subsidies, which directly reflected on its marketing and promotion expenses.
Despite its huge losses, Pinduoduo still has sufficient cash flow amounting to RMB 34.4 bln. However, some market analysts believe the company's business model can sustain high gross margin and should lead to profit as revenue scales up.
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