Chinese e-commerce platform Pinduoduo slips 19% in pre-market trade after revenue loss

The Pinduoduo logo is seen in this illustrative photo taken on July 17, 2018. REUTERS/Thomas White/Illustration

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BEIJING (Reuters) – Shares in Chinese e-commerce platform Pinduoduo Inc (PDD.O) It fell 19% in US trade before entering the market on Friday after the company missed a quarterly revenue forecast as a new outbreak of the coronavirus hit consumer spending.

Shares of Shanghai-based Pinduoduo had already fallen nearly 54% this year by Thursday as Chinese authorities imposed increasing restrictions on big tech companies to monitor monopolistic practices and protect personal data.

Pinduoduo reported total revenue of 21.51 billion yuan ($3.37 billion) for the third quarter, below analysts’ average estimate of 26.59 billion yuan, according to IBES data from Refinitiv.

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New clusters of the COVID-19 outbreak in China have prompted consumers to become more cautious about spending.

CEO Chen Li said on an earnings call that the company will focus more on investing in research and development. “This is a huge shift in strategy from our first five years when we were more focused on sales and marketing,” he said.

Natalie Wu, managing director of Hong Kong-based brokerage Haitong International, said the stock’s pre-market move was an overreaction. “The seemingly large error is largely due to low-margin stuff being self-driving, and GMV (gross merchandise value) market growth is very resilient amid macro headwinds,” she said in a research note.

“Pinduoduo’s growth rate is stabilizing as they approach 900 million users,” she added.

Shares of US-listed rival Alibaba Group Holdings Ltd., which trimmed its annual revenue forecast earlier this month, fell 3.3%, while shares of JD.com Inc fell 3.1% before the opening bell. Read more

Meanwhile, Chinese food delivery giant Meituan (3690.HK) On Friday, it announced a fourth consecutive quarterly loss, as it invested more investments to expand its various businesses. Read more

Pinduoduo said the average number of monthly active users during the quarter grew 15% to 741.5 million.

Net income attributable to common shareholders was 1.64 billion yuan in the quarter ended September 30, compared to a loss of 784.71 million yuan a year earlier.

(dollar = 6.3880 Chinese yuan)

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Additional reporting by Tayashi Datta in Bengaluru and Sophie Yu in Beijing; Editing by Vinay Dwivedi, Ramakrishnan M and Susan Fenton

Our criteria: Thomson Reuters Trust Principles.

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