China's Pinduoduo posts first quarterly profit
Reuters
Published Aug 24, 2021 07:28AM ET
Updated Aug 24, 2021 09:55AM ET
(Reuters) -Chinese e-commerce platform Pinduoduo (NASDAQ:PDD) Inc reported its first ever quarterly profit on Tuesday as shoppers stayed online despite the easing of pandemic lockdowns but the company warned it could be a one-off.
Pinduoduo, which has the biggest e-commerce user base in China, said its profitability going forward was likely to be affected both by intensifying competition and investment in an agricultural sector initiative it launched on Tuesday.
Since being founded in 2015, the Nasdaq-listed company has become a competitive player in China's booming e-commerce space through an approach that melds social media with online shopping to offer attractive discounts.
In the three months to June 30, it reported net income attributable to ordinary shareholders of 2.41 billion yuan ($372 million) compared with a net loss of 899.3 million yuan a year ago and revenue of 23.05 billion yuan.
Pinduoduo shares jumped 14% when the market opened.
Pinduoduo's profitability has helped comfort investors at a time of heightened scrutiny by China of domestic tech firms on concerns over data privacy and anti-competitive behaviour. Its shares have more than halved in value since February.
"We do not expect profitability to continue," Tony Ma, vice president of finance, told analysts on an earnings call. "We do not think this quarter's profitability should be an indicator, or reference for our future investment in user mind-share and agri-focused infrastructure."
Chairman and Chief Executive Chen Lei said he expected the competition in China's e-commerce sector which was already "extremely dynamic and vibrant" to intensify.
"We are seeing more platforms entering the e-commerce space, so competition is increasing, and will continue to increase," Chen said.
The company said it was launching an initiative worth 10 billion yuan to address needs in the agricultural sector and rural areas and profits from the second quarter and future quarters would be allocated to the initiative, "until the total 10 billion yuan commitment is fulfilled".
($1 = 6.4766 Chinese yuan renminbi)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.