Share prices for Pinduoduo rocketed 20% in New York on Thursday after reporting robust top-line growth which easily beat analyst estimates as well as a surprise adjusted quarterly profit—its first since going public in 2018.

Why it matters: The results renewed investor confidence in Pinduoduo, which had missed market expectations in earlier quarters and faced mounting scrutiny for its inability to turn a profit.

  • Chinese tech stocks plunged earlier this week after Beijing rolled out on Tuesday anti-trust draft rules aimed at some of the country’s biggest internet companies. Pinduoduo shares dipped along with its peers but creeped upward on Wednesday. The new rules could benefit smaller platforms and have more impact on larger names, Barron’s reported citing analysts at research firm Morningstar.
  • Alibaba shares closed down around 9% on Wednesday on news of the rules, shadowing its Singles Day feat of booking gross merchandise volume of RMB 498.2 billion during the promotion.

Details: Pinduoduo posted third quarter revenue of RMB 14.2 billion ($2.1 billion), climbing 89% year on year from RMB 7.5 billion in the same quarter of 2019. Revenue reached the high end of analyst estimates compiled by Yahoo Finance. Growth decelerated from the 129% annual rate seen in Q3 last year.

  • Pinduoduo’s annual active buyers rose 36% year on year to 731 million in the 12 months ended September, representing a net add of 48 million from Q2. The user size is on par with rival Alibaba, which added 15 million to reported 757 million annual active buyers in the quarter ended September.
  • However, Pinduoduo’s clientele are significantly more budget-conscious that those of its peers. Annual spend per active buyer on the platform in the 12-month period ended September was RMB 1,993 ($293.6), an increase of 27% from RMB 1,567 over the same period last year. Annual spend per active buyer for rival Alibaba was around RMB 9,000 per buyer, and approximately RMB 6,000 for
  • The company recorded its first quarterly adjusted profit with non-GAAP net profit attributable to shareholders hitting RMB 466 million compared with a net loss of RMB 1.6 billion the same quarter a year ago. Adjustments noted in its filing included share-based compensation and interest payments related to its convertible bonds.
  • Pinduoduo will continue to invest in its “New Brand” initiative by providing support to merchants and manufacturers under the “consumer-to-manufacturer” model.
  • The company recently launched Duo Duo Maicai, an agricultural product sales channel. To address the specific logistics demands for produce, the company is “prepared to go heavy in building” and “accelerating the development of agriculture infrastructure,” David Liu, vice president of strategy, said during the earnings call held Thursday night.
  • Tiger Brokers analysts expect the company will swing back into a loss in Q4 given the huge marketing expense for Singles Day. However, they are bullish on the company’s long-term prospects. “Profitability is just a matter of time after the model is proven,” the analysts wrote in a research note.

Context: Pinduoduo and Alibaba, two of the largest e-commerce platforms in China, have long been locked in a public spat about “forced exclusivity,” whereby marketplace platforms force sellers to exclusively list on one online marketplace.

  • Chinese market regulators began to curb such unfair practices last year, reminding more than 20 e-commerce sites on a forum that forced exclusivity is illegal.
  • Intensified” forced exclusivity efforts from rivals has weighed on Pinduoduo’s performance, according to the company.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.