To The Moon

In less than 1 year, $Pinduoduo Inc.(PDD)$ has risen 344% from the bottom to reach a market cap of $130.2 billion. Among the Chinese stocks listed in the US, it is second only to $Alibaba(BABA)$ .

Stellar performance in 2022

Behind the soaring share price is strong performance. Taking the third quarter of 2022 as an example, Pinduoduo's revenue grew 65% year-on-year, much higher than Alibaba's 3% and $JD.com(JD)$ 11% revenue growth rates.

Pinduoduo's revenue growth rate dropped to single digits in the first half of 2022. It is mainly because Pinduoduo had vigorously developed its self-operated merchandise sales in the same period in 2021. Although the mechandise business has huge revenue scale, the profit is meager. We can refer it to JD, which is mainly self-operated business.

After 3 quarters, Pinduoduo gave up to develop its merchandise sales and focused on positioning itself as a third-party e-commerce platform. As a result, the overall revenue slowed down in 1H22.

However, in terms of revenue by segment, Pinduoduo's main businesses such as online marketing services and transaction service revenue still maintained high growth in 1H22:

Pinduoduo's high growth is due to the platform's positioning of low-priced goods. Especially in 2022, Chinese consumers' income was affected by the pandemic and consumption downgrade became a phenomenal event.

In addition to revenue growth ahead of rivals, Pinduoduo's profitability is even more impressive. Net income for the third quarter of last year was $10.6 billion, with a net margin of nearly 30%.

Looking back at Pinduoduo's development journey in China, from low-price strategy to tens of billions of subsidies, Pinduoduo has far surpassed $Alibaba(BABA)$ and $JD-SW(09618)$ .

The full-fledged Pinduoduo turned to the international market. Its overseas version Temu has continuously topped the APP store list.

Pinduoduo's overseas strategy is a huge success

Temu's hot even overshadowed the popular shein.

Temu's strategy in the US is similar to that in China: Temu's "Referral Bonus" is popular with American consumers, a strategy that replicates the essence of Pinduoduo's social fission in China.

Users who invite new users to sign up for Temu through platforms such as WhatsApp, Twitter, and Facebook will receive $20 cash for every five friends they invite, and the more people they invite, the more generous the reward.

In addition to low-cost fission growth, Temu also takes a cue from shein and TikTok, placing ads on Facebook, Instagram, TikTok and other social media through KOL unboxing reviews and content ads. In January 2023 alone, Temu placed at least 6,400 ads on Facebook.

So far, Pinduoduo has won its first battle in America.

According to the latest global startup value ranking by U.S. market agency Crunch base, SHEIN is currently valued at up to $100 billion. Based on this calculation, Temu also has the potential to achieve 100 billion.

Compared to the Chinese market, overseas e-commerce is a vast market with great potential for Pinduoduo.

According to analyst forecasts on Bloomberg, Pinduoduo's revenue is expected to be 163.26 billion in 2023, up 25.6% year-on-year, and net income is expected to reach 42.2 billion.

On this basis, Pinduoduo's P/E ratio for the coming year is just 21x. Matching the potential growth rate, Pinduoduo has huge potential for the future.