After JD and Alibaba, Wall Street braces for Pinduoduo earnings results

Chinese e-commerce firm Pinduoduo (NASDAQ: PDD) is slated to report first-quarter 2019 earnings results before the market opens on Monday, May 20. Analysts expect the company to report a loss of 38 cents per share on revenues of $620.08 million.

During the last reported quarter, the company had posted an impressive 379% growth in top-line growth, riding on the strength of its online marketing services. Average monthly users almost doubled to $272.6 million, while gross merchandise value more than tripled, highlighting the strength of the platform.

The number of active buyers at the end of the fourth quarter was 418.5 million, an increase of 71%  year-over-year.  

Yet, shares fell during the last quarter as investors were unimpressed with the wider-than-expected losses. The same is likely to happen this quarter if the company fails to peg its costs and provide a roadmap on how it aims to achieve profitability.

Pinduoduo, which went public in June last year, was one of the biggest Chinese IPOs in 2018. The company is known to sell inexpensive items at attractive bargains, focused at price-conscious customers.

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In an investor letter made public earlier this month, the company claims to be the second largest online marketplace in China by electronic records, following Alibaba (NYSE: BABA). If this is true, it means Pinduoduo has surpassed JD.com (NASDAQ: JD) in terms of electronic records.

Pinduoduo featured in the recently published US Trade Representative’s blacklist for the suspected fake items sold on the site, along with Alibaba’s Taobao. The management had earlier rubbished this report and may provide further clarification during the earnings conference call on Monday.

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The Shanghai-based firm’s stock has been almost flattish since the beginning of this year. Since its market debut, the stock has so far gained 21%.

Yesterday, Alibaba Group (NYSE: BABA) surpassed analysts’ targets for fourth-quarter earnings and revenue. BABA share rose 4% following the results.  

JD.com Inc.’s (NASDAQ: JD) shares jumped 8.6% last week after the company topped analysts’ forecasts on revenue and earnings for the first quarter of 2019.

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