Pinduoduo (PDD) rallies after 'blowout' results

Pinduoduo (NASDAQ: PDD) delivered massive earnings beat to send its shares nearly 15% higher in pre-market Monday.

The e-commerce platform reported Q3 EPS of RMB8.62 (US$1.21) on sales of RMB35.5 billion (US$4.991 billion) to crush the average analyst estimate of RMB3.83 on revenue of RMB30.71 billion. PDD said its revenue from online market services soared +58% year-over-year.

“We continued to deepen our value creation in the third quarter,” said Mr. Lei Chen, Chairman and Chief Executive Officer of PDD. “We will increase our R&D investment to further enhance the supply chain efficiency and agricultural digital inclusion.”

“Investment in certain projects was affected in the third quarter,” added Ms. Jun Liu, VP of Finance of PDD. “We will continue to step up our investment in R&D and create long-term value through innovations.”

Morgan Stanley analyst Andre Chang expects a “strong” reaction to very positive results. The analyst added that delivered results fall under “the most bullish scenario” and will “further strengthen the market’s expectation that PDD can maintain a well-above-industry revenue growth for a longer period of time, leading to further valuation re-rating.”

Moreover, the results will “leave enough buffer for the company’s potential loss in overseas markets while still offering upside risk for its 2023 earnings estimates.”

Citi analyst Alicia Yap said PDD delivered a “blowout quarter.”

“The massive profit beat once again demonstrate its high operating leverage of marketplace model despite S&M grew yoy and qoq,” Yap wrote in a note.

By Senad Karaahmetovic

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