CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Pinduoduo aiming to become world’s biggest grocer

China’s fastest-growing e-commerce player Pinduoduo’s shares were hit by its chairman’s resignation, even as the company zooms in on agriculture-focused logistics.

  • Pinduoduo Inc (Nasdaq: PDD) share price falls to US$141.80 per share
  • Founder and chairman Colin Huang stepped down last week
  • Revenue more than doubled in 4Q20, exceeding analysts’ expectations
  • The firm plans to invest in agriculture-focused logistics capabilities
  • Trade Pinduoduo stocks with an IG account

Pinduoduo shares shed 11.9% in three days

Shares of Chinese e-commerce platform Pinduoduo, which matches farmers to consumers, slipped 0.01% day-on-day to finish at US$141.80 last Friday (19 March 2021) in New York.

The stock had slumped 11.9% across three days last week, partly dragged by news of Pinduoduo’s billionaire co-founder Colin Huang Zheng having resigned last Wednesday.

As of Sunday, 38 analysts recommended ‘buy’ on Pinduoduo, seven rated ‘hold’ and four said to ‘sell’. Their average target price was US$177.65 per share, Bloomberg data showed.

Pinduoduo co-founder quits

Pinduoduo’s chairman and co-founder Huang has stepped down from the board and relinquished special voting rights that gave him control. Huang will focus on longer-term initiatives, including research in food and life sciences.

Co-founder Chen Lei assumed the role of chairman, and continues to serve as CEO.

Huang’s departure leaves a shortage of top talent for a young company as rising costs bite, Reuters wrote.

Bernstein analysts noted that Huang’s board exit ‘had an air of inevitability’ after he resigned as CEO in July 2020. However, the timing of the departure still came as a surprise, they said.

Revenue surges 146% in fourth quarter of 2020

Last Wednesday morning, Pinduoduo reported that its net loss narrowed to RMB1.38 billion for October-December 2020, from RMB1.75 billion a year ago.

Revenue climbed 146% year-on-year to RM26.5 billion, beating the consensus forecast by 38%, CMB International analysts noted. The robust top-line was driven by growing demand for groceries and the increasing number of people in less-developed cities turning to online shopping.

Pinduoduo also overtook Alibaba Group Holding to become China’s biggest e-commerce platform by users in December 2020.

That being said, the rise in e-commerce volumes - about 57% quarterly growth in gross merchandise value last year - lagged expectations, Citi analysts said.

What are Pinduoduo’s next steps?

In 2021, Pinduoduo is prioritising agricultural products, supply chain, and offline fulfillment, CMB International noted, as it trimmed its target price to US$175 and maintained a ‘buy’ call.

While there might be short-term pressure on Pinduoduo’s shares, CMB International is positive on long-term top-line growth, fuelled by stronger user engagement, agricultural products potential, and initiatives under the Duo Duo Maicai platform, which sells fresh produce.

The company aims to become the world’s biggest grocer, and thus will invest in an agriculture-focused logistics infrastructure platform in the next few years. Plans include improving its infrastructure network to reduce wastage, and working with third-party providers to achieve a 24-hour turnaround for perishable goods.

Bloomberg Intelligence analysts wrote that Pinduoduo’s rapidly expanding sales could help narrow operating losses in the medium term.

Trade today's most talked about stock with IG - long or short

Create an IG account or log in to your existing account to get started now.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.