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Shaun Rein, founder and managing director of China Market Research Group, said that the share price of Chinese online retailer Pinduoduo (PDD Holdings) fell by nearly 30%, and “the adjustment was too large.”
Rein said in an interview with CNBC’s “Street Signs Asia” that “the panic last night was exaggerated” and that this would be a good opportunity for investors to buy the stock.
His comments came after the stock was released Pinduoduo Holdings It plunged 28.57% on Monday, the largest single-day drop since the Nasdaq was listed on the market. Second quarter results Didn’t meet expectations.
Pinduoduo’s second-quarter revenue was 97.06 billion yuan ($13.6 billion), an increase of 86% from the same period last year. But this was lower than analysts polled by FactSet had expected quarterly revenue of $14.034 billion, or 99.98 billion yuan.
Pinduoduo announced operating profit of 32.56 billion yuan, an increase of 156% from the same period last year, and attributable revenue increased by 144% year-on-year to 32.01 billion yuan.
“I actually think Pinduoduo is a good bet down 30% because it’s still growing,” Rein said. “Well, it didn’t meet analysts’ expectations, but you still grow 20%, 30%, you still get Billions of dollars in revenue.
He mentioned brands such as Pinduoduo, costco and Walmart’s Sam’s Club will benefit from China’s economic weakness as Chinese consumers spend less. Pinduoduo is the largest e-commerce platform owned by Pinduoduo. It has a group buying function. The more people join, the lower the price.
“Because the titles now and for the rest of the year … are value to Chinese consumers,” Lane said.
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But Ben Harburg, portfolio manager at asset manager CoreValues Alpha, said the sell-off was likely triggered by cautious statements from company leadership rather than second-quarter numbers.
“While we are encouraged by the solid progress we have made over the past few quarters, we see many challenges ahead,” Pinduoduo Chairman and Co-CEO Chen Lei wrote in the earnings report.
Chen added that the company is “prepared to accept short-term sacrifices and potential declines in profitability” as it invests heavily in areas such as trust and security and improves its business ecosystem.
Liu Jun, Pinduoduo’s vice president of finance, echoed his sentiments, writing: “Looking ahead, revenue growth will inevitably face pressure due to intensifying competition and external challenges.” He added, “As we continue to invest resolutely, profitability will Capacity may also be affected.”
Harburg said that China’s e-commerce industry is currently saturated, and Pinduoduo faces domestic competitors, such as Jingdong, Alibabaand Shane. Globally, the company is working with companies such as Amazon.
That, coupled with weak consumer growth in China, has led to a decline in China’s e-commerce industry, Harberger said, pointing to weak second-quarter results from JD.com and Alibaba.
“So I don’t think this is isolated. PDD, in many ways, PDD has outlasted other companies,” he said.
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