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Pinduoduo Sales Miss Estimates Amid China Slowdown

Pinduoduo Sales Miss Estimates Amid China Slowdown

Pinduoduo Inc. reported revenue that missed estimates, the third straight quarter it’s disappointed investors after China’s economic slowdown sapped online consumption.

Sales for the December quarter inched 3% higher to 27.2 billion yuan ($4.3 billion), Pinduoduo reported on Monday. That lags the 30 billion yuan analysts expected on average and represents by far the slowest rate of growth since the company went public in 2018. It swung to a net income of 6.6 billion yuan from a loss previously, thanks to a sharp reduction in costs and a one-off rebate from a service provider that it didn’t specify.

The disappointing sales results reflect the challenges ahead for Pinduoduo, one of the more volatile Chinese stocks in a broad tech selloff that emerged in 2022 as investors grapple with the uncertainty of Beijing’s ongoing tech crackdown and a delisting threat from Washington. The U.S. depositary receipts fell 4.8% in New York on Monday morning.

The Shanghai-based company is one of few Chinese internet giants that have yet to seek a secondary listing outside the U.S. Although shares of Chinese tech companies, Pinduoduo included, rebounded in past days following Beijing’s vow to support its economy and markets, it remains unknown if regulators from both countries can resolve a dispute over accounting.

The company founded by Colin Huang gained a foothold in China’s highly competitive ecommerce arena by selling cheaper goods to cost-sensitive families in less-developed regions. But now larger rivals like Alibaba Group Holding Ltd. and JD.com Inc. are catching up on that front with their own bargain-hunting apps, just as persistent Covid-19 outbreaks across China slow retail spending. 

Pinduoduo’s active buyer accounts expanded 10% to 868.7 million in 2021, lagging expectations for 883.3 million.

Pinduoduo Sales Miss Estimates Amid China Slowdown

©2022 Bloomberg L.P.