Money-losing Chinese e-commerce upstart Pinduoduo has raised $1.1 billion through a private placement, a move that could bankroll its expansion as effects of the Covid-19 outbreak still play out across China, the company said Tuesday.
The placement will be made through issuing new shares representing approximately 2.8% of Pinduoduo’s outstanding total. The placement will go to some of the company’s existing long-term investors, and is expected to close in early April, it said, without providing the investors’ names.
The news comes just weeks after Pinduoduo posted weaker-than-expected revenue for the fourth quarter of 2019. The Nasdaq-listed company’s total revenue nearly doubled to 10.79 billion yuan ($1.55 billion) in the year’s final quarter, but missed the average analyst estimate of 10.93 billion yuan.
Meanwhile, Pinduoduo chairman and CEO Colin Huang also warned during the quarterly earnings call that disruptions linked to the coronavirus pandemic will “have negative impact on our results for the first quarter of 2020.”
Shanghai-based Pinduoduo, which competes with Alibaba and JD.com, sells heavily discounted goods to attract consumers in what many industry watchers call a “money-burning” strategy.
The company is still loss-making in spite of a narrowing net loss in the last three months of 2019, when it reduced its net loss to 1.75 billion yuan from 2.42 billion yuan the previous year.
Contact reporter Ding Yi (email@example.com)