Pinduoduo share prices slid 8.5% to $20.78 on Monday after the Chinese social e-commerce platform reported surging losses for the first quarter of the year on significantly higher promotional expenses, while user engagement efforts gained traction.

The company recorded total revenue for the quarter of RMB 4.6 billion (around $677.3 million), an increase of 228% from RMB 1.4 billion in the same quarter of 2018, driven by growth in online marketing revenues earned from the platform’s merchants. Annual spending per active user surged 87% compared with Q1 2018, and monthly active users (MAU) jumped 74% year on year to 289.7 million, according to the statement.

However, heavy spending weighed, particularly sales and marketing expenses, which quadrupled from the same period a year earlier to RMB 4.9 billion (around $728.5 million) on promotional activities driven by on- and offline advertisements and promotions, according to the company. Pinduoduo sponsored the CCTV Spring Festival Gala, China’s biggest annual TV event boasting 1.2 billion viewers in 2019, and a series of online promotions leading up to the TV event.

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.