Revenue Grows But Losses Blow Out for U.S.-Listed Pinduoduo
What’s new: Nasdaq-listed Pinduoduo Inc. lost 4.1 billion yuan ($575 million) in the first quarter, doubling its losses for the equivalent period last year, it reported Friday.
But the Chinese group-buying e-commerce site recorded a 43% year-on-year revenue increase for the same period.
The context: People in China flocked to e-commerce sites as they stayed at home to avoid catching coronavirus this quarter, spiking sales on the platform.
But Pinduoduo’s vice president of strategy David Liu said a reduction in advertising spend by merchants had hit the firm’s bottom line, telling the company’s quarterly earnings call this was a result of economic uncertainty brought by Covid-19.
Pinduoduo had “made a deliberate decision to further invest in our ecosystem and reallocate our spending in ways that would benefit our users and merchants most in this time of crisis,” Liu added.
Analysts expects Pinduoduo will remain in the red in the short and medium term as it continues to spend big to take on sector leaders Alibaba and JD.com.
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