Strategic contraction
After Pinduoduo (PDD) releasing its Q4 and 2021 annual results, its stock price sinked. The reason is that PDD only achieved a 3% year-on-year growth, but market did not see the company's strategic contraction for self-operated business. Platform revenue (online marketing services and other transaction services) reached 27.15 billion, accounting for more than 99% of the total revenue, up 28% YoY. The growth rate of 28% is not very good, but it is still considerable, after all, the macroeconomic is on a downward spiral, the market must face the fact that the phase of high growth of PDD has ended.
The number of user growth is close to the limit
By the end of 2021, PDD's AAC reached 868.7 million, up 10% YoY. Compared with its main competitors, Alibaba announced last month that its AAC in the domestic market for the third quarter of fiscal year 2021 was 979 million, and Jingdong announced this month that its 2021 earnings report showed an AAC of 570 million. Although there is a huge gap between PDD and Alibaba , but if we exclude Alibaba's e-commerce users in service category, its AAC of core e-commerce users is 882 million.
Another noteworthy figure in 21Q4 is the 23% year-over-year decline in marketing expenses, as the company is no longer focused on increasing new users, and PDD starts to achieving the gradual transition from pursuing the number of users to better and faster meeting user demand.
Monetization rate continues to be high
PDD's monetization rate for 2018, 2019, 2020 and 2021 is 2.94%, 2.99%, 3.25% and 3.85% respectively, which continues to grow. Alibaba, which is also a e-commerce company, has the highest monetization rate in recent fiscal years at 4.07% in FY2021, and in the range of 3%-4% during 17-20 years. At present, it is not easy for Ali to break through the highest monetization rate of 4.07% in the future.
(1) Ali's traffic and resources are more tilted to the head of the merchants, and the competition between other merchants is fierce. On the contrary, although Poundland has started to charge 1%-2.5% commission rate from January 21 to the tens of billions of subsidized merchants, but the commission is about one-half of Ali's.
(2) Although there are more competitors, However, in general, Pinduoduo is still more based on the However, in general, Pinduoduo is still more based on the asset-light model of online bilateral operation.
In summary, Jianzhi Research believes that the strategic direction of Pinduoduo is actually very correct: in the state that users are rapidly growing, decisively reduce the investment in marketing and turn to investment in technology to better and more comprehensively meet consumer needs. Using its own advantages to focus on agriculture, but also cleverly plays its social responsibility as an Internet giant company. There is a brighter future ahead.
Source: Jianzhi Research
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