Pinduoduo Reports Big Wins and Losses in the First Post-IPO Report Amidst Counterfeit Goods Scandal
After going public in July, the e-commerce giant Pinduoduo Inc. (PDD) released its first quarterly report on Aug. 30, showing some big gains and even bigger losses. Since the release, the NASDAQ stock went up around 5 percent in the after-market hours, after experiencing one of its worst trading days ever.
The report shows unaudited financial results for the second quarter of 2018 ended on June 30, 2018. Some highlights include the rise in its gross merchandising volume (GMV), total revenue, and the number of average monthly active users.
PDD’s twelve-month period GMV upped 583 percent to 262.1 billion yuan ($39.6 billion) on a year-on-year basis, while its total revenue grew 2,489 percent to 2,709 billion yuan on a year-on-year basis. The number of quarterly active users also soared by 245 percent year-over-year to 343.6 million, close to the entire population of the United States.
Aside from the gains, PDD suffered heavy losses as well. Its operating loss piled up from 122.7 million yuan to 6.64 billion, an overwhelming increase of 5,831 percent.
“The net loss was in line with our expectations as we continue to generate strong positive cash flows,” says Tian Xu, vice president of finance at Pinduoduo in an official statement.
The three-year-old company went public on the NASDAQ in late July but has been plagued by lawsuits and scandals ever since.
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News first broke out about China’s State Administration for Market Regulation conducting multiple investigations on counterfeit goods sold on PDD. Then, the company became the defendant in multiple class-action lawsuits in the United States, on the account of being sued for making “materially false and/or misleading statements”, as well as failing to “disclose material adverse facts”, specifically referring to PDD’s failure to prevent counterfeits to be sold on its platform.
Finally, in an open letter published on Aug. 22, PDD announced its actions against the infamous counterfeits prevalent on its platform. In the period between Aug. 2 to 9, it allegedly shut down 1,128 stores, delisted 4.3 million items, and stopped 450,000 potential counterfeit listings from going up onto the platform.
Its stock price, however, has not reflected a change in the investor’s attitude towards the Chinese e-commerce platform. PDD’s stock price soared 44 percent on the first day from $19 to $26.7, but has since plummeted to $17.99. Prior to the release of the report, PDD closed one of the worst trading days in history with a drop of 14.94 percent.