Pinduoduo Inc. operates an e-commerce platform with a wide variety of products including beauty, fashion, electronics and groceries, servicing customers worldwide.
| Key Statistics | |||||||
| 52-Week Range | Avg. Daily Vol (3 Mo) | Market Value | Dividend Yield | Float % | Target Price | Consensus Rating (5 strong buy – 1 strong sell) |
Next Earnings Announcement |
| 30.2 – 155.61 | 8,823,475 | 159,955.0 | – | – | 90.03 | 4.78 | 02/03/2021 |
PDD is the third largest e-commerce platform in China, behind Alibaba and JD.com, operating a slightly different business model. PDD operates a consumer-to-manufacturer (C2M), connecting value seeking consumers and factories directly, removing the middlemen.
Similar to the Alibaba model which operates a platform selling products of third parties, PDD differentiates itself where the majority of revenue is derived from online advertising rather than commissions charged to sellers. A unique offering of Pinduoduo is “group buying”, where users can participate in purchases as a group. The more buyers that join in, the cheaper the item becomes with buyers sharing links on social media to connections with a time limit of 24 hours to reach a minimum number of buyers required. The platform also offers the option to buy an item directly at a higher price. Tencent has a 17% stake in the company and users of PDD typically share links for group buying across Tencent’s WeChat and QQ platform allowing PDD to attract users at a low cost. While the company has benefited from the first mover advantage in its business model adding users at a faster pace than rivals Alibaba and JD.com, it faces increased competition from Alibaba and JD.com which have launched rival products in the past year.
For the year ending December 2020 revenue is forecast to rise 69.5% to 51,079.6m Yuan from 30,141.9m Yuan a year earlier, and a further rise of 55% is expected in 2021 to 79,167m Yuan. Adjusted earnings per share is expected to rise 54.1% in 2020 to -2.77 Yuan before rising sharply by +211% to 3.11 Yuan in 2021. Heavy marketing expenses in recent years have helped to fuel surging users and sales revenue that taper moving forward with revenue continuing to rise, helping to finally deliver an operating profit. The company recently posted its first quarterly net profit in Q3 2020 of 0.33 Yuan after revenue grew 89% year-on-year, adding 48m users for the quarter to 731m total. Lofty sales expectations have driven a surging valuation with the company trading on forward P/E multiples of 283.6 and 81.0 for 2020 and 2021, significant premiums its peers’ averages of 47.5 and 54.0 respectively.
The average target price of analysts covering the stock is $131.53 with 51% of analysts rating the stock as a buy, compared to 13% as a sell and 36% as a hold.
