Pinduoduo Inc. (NASDAQ: PDD), China’s third-largest e-commerce platform, recorded two solid figures in its 2019 fourth quarter and full year earnings results. Its annual gross merchandise value (GMV) crossed RMB 1 trillion (USD 140 billion), a 113% increase from 2018, for the first time. In comparison, GMV across Alibaba’s domestic markets in 2019 was RMB 5.7 trillion (USD 820 billion).
Annual active buyers on Pinduoduo also grew to 585 million, still less than Alibaba’s 710 million as of last year-end but more than the 360 million of JD.com at the end of 2019.
It took Pinduoduo less than five years to hit a trillion yuan sales benchmark, while Alibaba and JD.com, the other two major e-shop operators in the country, spent more than ten years.
Still, the triumphal numbers were not well received amongst investors. The Nasdaq-listed company’s share dropped around 7%, closing at USD 35.06 on Wednesday.
Partially to be blamed for the stock plunging is Pinduoduo’s widening non-GAAP annual operating net loss of RMB 5.981 billion, as opposed to 2018’s RMB 3.958 billion.
Rose among China’s price-sensitive lower-tier consumers as an online group-buying choice, Pinduoduo has built up its name as a bargain hunter. To strengthen its position, the company launched a perennial campaign dubbed the “Ten Billion Yuan Project” in the middle of last year in partnership with its vendors to subsidize products sold across its platform, aiming to maintain a price edge and attract more new customers.
The Shanghai-based company’s latest financial results show it has successfully pulled out a 49 million user growth in the past quarter, more than the new users recorded by Alibaba and JD.com combined. However, the cash-burning strategy also made Pinduoduo suffer from a continuous loss on its account book.
Additionally, the COVID-19 outbreak would cast a negative impact on the company’s 2020 Q1 business, though Pinduoduo holds a positive attitude towards its long-term goals, said Huang Zheng, the company’s CEO.
In contrast to some internet companies that have cut employees’ salaries to save cash amid the business halt caused by the global health crisis, Pinduoduo decided to give a pay raise to most of its team members. “The most precious asset for Pinduoduo is its people,” said the CEO.
Update: An earlier version of the graphic incorrectly stated the quarterly growth of active users on JD, Alibaba, and Pinduoduo. We have updated the graphic and we regret the error.