Pinduoduo aiming to become world’s biggest grocer
China’s fastest-growing e-commerce player Pinduoduo’s shares were hit by its chairman’s resignation, even as the company zooms in on agriculture-focused logistics.
- Pinduoduo Inc (Nasdaq: PDD) share price falls to US$141.80 per share
- Founder and chairman Colin Huang stepped down last week
- Revenue more than doubled in 4Q20, exceeding analysts’ expectations
- The firm plans to invest in agriculture-focused logistics capabilities
- Trade Pinduoduo stocks with an IG account
Pinduoduo shares shed 11.9% in three days
Shares of Chinese e-commerce platform Pinduoduo, which matches farmers to consumers, slipped 0.01% day-on-day to finish at US$141.80 last Friday (19 March 2021) in New York.
The stock had slumped 11.9% across three days last week, partly dragged by news of Pinduoduo’s billionaire co-founder Colin Huang Zheng having resigned last Wednesday.
As of Sunday, 38 analysts recommended ‘buy’ on Pinduoduo, seven rated ‘hold’ and four said to ‘sell’. Their average target price was US$177.65 per share, Bloomberg data showed.
Pinduoduo co-founder quits
Pinduoduo’s chairman and co-founder Huang has stepped down from the board and relinquished special voting rights that gave him control. Huang will focus on longer-term initiatives, including research in food and life sciences.
Co-founder Chen Lei assumed the role of chairman, and continues to serve as CEO.
Huang’s departure leaves a shortage of top talent for a young company as rising costs bite, Reuters wrote.
Bernstein analysts noted that Huang’s board exit ‘had an air of inevitability’ after he resigned as CEO in July 2020. However, the timing of the departure still came as a surprise, they said.
Revenue surges 146% in fourth quarter of 2020
Last Wednesday morning, Pinduoduo reported that its net loss narrowed to RMB1.38 billion for October-December 2020, from RMB1.75 billion a year ago.
Revenue climbed 146% year-on-year to RM26.5 billion, beating the consensus forecast by 38%, CMB International analysts noted. The robust top-line was driven by growing demand for groceries and the increasing number of people in less-developed cities turning to online shopping.
Pinduoduo also overtook Alibaba Group Holding to become China’s biggest e-commerce platform by users in December 2020.
That being said, the rise in e-commerce volumes - about 57% quarterly growth in gross merchandise value last year - lagged expectations, Citi analysts said.
What are Pinduoduo’s next steps?
In 2021, Pinduoduo is prioritising agricultural products, supply chain, and offline fulfillment, CMB International noted, as it trimmed its target price to US$175 and maintained a ‘buy’ call.
While there might be short-term pressure on Pinduoduo’s shares, CMB International is positive on long-term top-line growth, fuelled by stronger user engagement, agricultural products potential, and initiatives under the Duo Duo Maicai platform, which sells fresh produce.
The company aims to become the world’s biggest grocer, and thus will invest in an agriculture-focused logistics infrastructure platform in the next few years. Plans include improving its infrastructure network to reduce wastage, and working with third-party providers to achieve a 24-hour turnaround for perishable goods.
Bloomberg Intelligence analysts wrote that Pinduoduo’s rapidly expanding sales could help narrow operating losses in the medium term.
Trade today's most talked about stock with IG - long or short
Create an IG account or log in to your existing account to get started now.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.