On May 22, Pinduoduo Group (PDD.NYSE) released its financial report for the first quarter of 2024, ending March 31. The report shows that Pinduoduo achieved revenues of 86.8 billion yuan in the first quarter, a year-on-year increase of 131%, and the net profit attributable to Pinduoduo‘s ordinary shareholders was 27.978 billion yuan, a year-on-year increase of 246%.
Previously, the market’s revenue expectation for Pinduoduo for this quarter was 76.86 billion yuan. After the release of the financial report, Pinduoduo‘s pre-market share price in the U.S. rose by more than 13% to $158.46 per share. With the release of the financial report, Pinduoduo‘s market value once again surpassed Alibaba.
From the financial report, Pinduoduo‘s revenue and profit growth still outperformed its e-commerce peers. However, with the increase in sales and marketing expenses, Pinduoduo needs to strengthen its low-price mindset as domestic e-commerce is paying more and more attention to price factors. In the overseas expansion of Pinduoduo‘s cross-border business, Temu, Pinduoduo is also continuously increasing its investment.
In a conference call after the release of the financial report, Chen Lei stated that from the perspective of industry competition, consumers have already formed the habit of cross-platform consumption. Consumers will make comprehensive comparisons between different platforms from multiple dimensions such as product categories, prices, and service quality, and then make choices.
“Facing such a trend, we saw that our peers significantly increased their efforts in the first quarter, and Pinduoduo welcomes healthy competition,” Chen Lei said.
The domestic e-commerce market’s price and service competition is intensifying, and Pinduoduo will face new challenges in price and category operations in areas such as billion-dollar subsidies. The financial report shows that Pinduoduo‘s total operating expenses for the quarter were 28.1437 billion yuan, a 44% increase from 19.5827 billion yuan in the same period in 2023. The report shows that this growth is mainly due to an increase in sales and marketing expenses. During the reporting period, sales and marketing expenses were 23.4107 billion yuan, a 44% increase from 16.2597 billion yuan in the same period in 2023, mainly due to an increase in promotional and advertising activities.
On the other hand, the overseas expansion of Temu is also worth paying attention to. During the reporting period, Temu launched a semi-hosted model to strengthen the fulfillment ability of platform goods. Currently, Temu’s semi-hosted business has landed in nine countries including the United States, Canada, the UK, Australia, New Zealand, Germany, France, Italy, and Spain. At the same time, Temu recently passed a tax incentive program certification by the Brazilian government, exempting import fees for goods under 50 dollars. This means that Temu is closer to expanding its business to Brazil.
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