Social e-commerce platform Pinduoduo’s (拼多多) share price has been set at $22.80 ahead of its US initial public offering (IPO) tomorrow (July 26), giving it a market value of $28.8 billion, according to local media.
The company’s submission to the Securities and Exchange Commision in the US shows shares were expected to be priced between $16 and $19. However, due to oversubscription, sources say the company decided to raise the price.
Pinduoduo, which was founded in 2015, has quickly become one of the fastest growing e-commerce giants in China. As of April 2018, the company had over 300 million users. In 2017, the three-year-old e-commerce startup’s gross merchandise volume (GMV) exceeded RMB 100 billion–a point that took Taobao five years and JD 10 years to reach.
The company was rumored to have received funding to the tune of $3 billion from Tencent and Sequoia Capital in April. Pinduoduo was of strategic importance to Tencent, which has been expanding into online retail.
Its success has primarily been due to its cheap products and target market. The company mainly focuses on lower-tier cities and low-income users, who have mostly gone ignored by tech giants until recently.
However, despite the company’s quick rise, it has not been immune to controversy. In June, Pinduoduo faced backlash from store owners over who believed it had executed improper standards when evaluating their products after the company conducted a quality audit. The company froze the accounts of shops whose products were deemed to be of low quality. The move eventually led to protests at the company’s office in Shanghai.