Shares of Pinduoduo tanked 13.5% on Friday after China’s second-largest social e-commerce company reported lower-than-expected 2Q revenues. The company’s total revenues of $1.73 billion fell short of analysts’ expectations of $1.84 billion.
Meanwhile, Pinduduo’s (PDD) adjusted loss per share narrowed to $0.01 from $0.04 reported in the year-ago quarter and beat Street estimates of a loss of $0.02.
Pinduoduo’s gross merchandise volume (GMV) jumped 79% to $179.6 billion in the 12 months ended June 30. During the 12 months, the number of active buyers and annual spending per active buyer increased by 41% and 27%, respectively. Moreover, average monthly active users in 2Q grew 55% to 366 million year-on-year. (See PDD stock analysis on TipRanks).
The company’s VP Tony Ma, said that the top-line increase was “driven primarily by growth in our online marketing services revenues. We observed healthy recovery in advertising demand from our merchants during the quarter.”
Last month, J.P. Morgan analyst Alex Yao upgraded the stock to Hold from Sell and raised the price target to $85 (1.2% upside potential) from $25. Yao said that Pinduoduo’s “strong” execution is driving a better long-term outlook.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is divided between 6 Buys and 6 Holds. With its stock up 122% year-to-date, the average price target of $85.03 implies upside potential of about 1.2%.
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