Pinduoduo Smashes EPS Estimates; Shares Gain 6% Pre-Market

Pinduoduo (NASDAQ: PDD) shares gained over 6% during the pre-market trading session today, after the largest agriculture-focused technology platform in China delivered a blowout fourth-quarter earnings beat and also laid out detailed plans for its agricultural digital inclusion efforts.

Mixed Q4 Numbers

Markedly, adjusted earnings of $0.92 per share (RMB 5.88 per share) almost trebled analysts’ expectations of $0.35 per share. Further, it was a significant improvement over the previous year’s loss of RMB0.15 per share.   

However, revenues jumped 3% year-over-year to $4.27 million but lagged consensus estimates of $4.73 million.

The increase in revenues reflected a surge in revenues from online marketing services and transaction services offset by decline in revenues from merchandise sales.

Average monthly active users grew 2% year-over-year to 733.4 million during the quarter.

Pinduoduo Bolsters Agricultural Digital Inclusion Efforts

Concurrent with the earnings announcement, the company laid out further details for its agricultural digital inclusion efforts in 2021, which aimed at spreading the benefits of the digital economy by connecting communities, supporting agricultural modernization, and facilitating the adoption of technology in agriculture.

Pinduoduo has connected over 16 million farmers to its 868.7 million buyers nationwide as of the end of 2021.

In 2021, the company witnessed an impressive 59% year-over-year surge in agricultural orders, with 61 billion orders placed on the platform in 2021.

Importantly, Pinduoduo CEO, Lei Chen, stated, “Similar to the last two quarters, we will allocate profits from the fourth quarter to the 10 Billion Agriculture Initiative to deepen our digital inclusion efforts in agriculture.”

CEO Comments

CEO Lei Chen, commented, “In 2021, we made the strategic shift from sales and marketing toward research and development.”

He further added, “We see ourselves making more long-term investment, especially in agriculture and R&D.”

Analysts’ Recommendation

Consensus among analysts is a Strong Buy based on three Buys and one Hold. The average Pinduoduo price target of $92 implies 119% upside potential to current levels, at the time of writing.

Investors Weigh In

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Pinduoduo, with 5.8% of investors increasing their exposure to PDD stock over the past 30 days.

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