Shares of Pinduoduo Inc. (NASDAQ: PDD) soared on Thursday, jumping over 20% in afternoon hours. The stock has gained over 255% since the beginning of this year. The company reported strong results for the third quarter of 2020, delivering double-digit revenue growth and a surprise adjusted profit, which surpassed market estimates.
One of the highlights of the quarter was the company’s initiatives in the agricultural sector in terms of helping people get fresh produce in a fast and smooth manner. The company sees significant opportunity in this area going forward.
Total revenues increased 89% year-over-year to RMB14 billion, or $2 billion, helped by a 92% gain in online marketing services. Adjusted net gain per ADS was RMB0.33, or $0.05, compared to a loss in the prior-year period. Average monthly active users jumped 50% to 643.4 million.
GMV for the 12-month period ended September 30, increased 73% year-over-year to RMB1,457.6 billion, or $214.7 billion. Active buyers during this period increased 36% to 731.3 million while annual spending per active buyer increased 27% to RMB1,993.1, or $293.6.
Pinduoduo benefited from high levels of engagement during the quarter and this positive trend still continues. In early October, peak daily order volumes exceeded 100 million driven by high demand for agricultural products.
Pinduoduo has become the largest online platform in China for agricultural products by paving the way for direct selling from farmers to customers. The company saw a rapid shift in customer behavior during the pandemic as more people turned to online channels to order their daily groceries, including fresh and perishable foods.
There is currently a lack of logistic infrastructure that facilitates the quick delivery of perishable agricultural products to customers. The need for a logistics channel dedicated to agricultural produce alone led Pinduoduo to launch the Duo Duo Maicai channel.
Pinduoduo is also exploring various investments in agritech and the company believes there is a vast market opportunity in smart agriculture to tackle challenges in areas such as food supply and food safety. The company generated RMB136 billion in GMV in agriculture during 2019 and expects this number to hit RMB250 billion in 2020.
Domestic market opportunity
Pinduoduo sees massive opportunity in the domestic market for Chinese manufacturers. The company has worked with over 1,500 companies, rolled out over 4,000 SKUs and generated over 460 million cumulative orders. Over the next five years, Pinduoduo aims to provide 100,000 C2M SKUs with an aggregate GMV of RMB1 trillion.
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