To The Moon

Pinduoduo recently announced its 2022 annual performance, which showed that its revenue for the quarter ending in December was RMB 39.82 billion, lower than market expectations of RMB 41.95 billion, and its net profit was RMB 9.45 billion. As a result, the company's stock fell by 15% in early trading in New York.

It is believed that during the COVID-19 pandemic in 2021, Pinduoduo may have incurred more costs in the process of promoting agricultural businesses and sales to consumers by offering more discounts, in addition to subsidies provided to merchants and customers. The increase in these costs is likely to have exceeded the growth in revenue. Therefore, in order to maintain its position as China's second-largest online retailer, Pinduoduo pulled out all the stops among numerous competitors.

Investors were bullish on Pinduoduo, which led to a continuous rise in its stock price. At the same time, Pinduoduo actively expanded into the North American market through its Temu shopping application.

Since receiving a subsidy plan of billions of RMB from JD.com.US, Pinduoduo has engaged in a price war of market erosion. The cost of promoting Temu in the United States and other markets may increase, leading to a situation where revenue falls short of market expectations.

Given that Pinduoduo is facing the same problems as its competitors, as well as economic uncertainty involving global inflation and a slowdown in the domestic economy, the company is under considerable pressure.

According to domestic economic data, consumer spending rebounded after strict pandemic restrictions were lifted, but with rising unemployment and continued sluggishness in real estate investment, economic recovery faces risks, which Pinduoduo cannot avoid. As e-commerce becomes increasingly difficult to operate, I believe that Pinduoduo needs to change its marketing strategy to turn its performance around. One possible strategy is to adopt a sales model similar to New Oriental's live streaming and product demonstrations.

Pinduoduo can incorporate this sales strategy by offering free delivery for purchases over a certain price, encouraging repeat purchases, and providing discounts. This can attract consumers to repeatedly use the Pinduoduo platform for shopping.

Regarding the impact of Pinduoduo's stock price after the announcement of its performance, I believe that investors were disappointed with the company's poor performance, which undermined their confidence in Pinduoduo's investment prospects. As a result, investors may want to consider reducing their holdings or avoiding Pinduoduo until the company's performance improves.

$Pinduoduo Inc.(PDD)$ 

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