Social commerce giant Pinduoduo posts maiden net loss on expenses surge as it aims to maintain rapid growth
Pinduoduo has been battling a storm over the listing of counterfeit and inferior quality products on its platform
Chinese social commerce firm Pinduoduo revealed a heavy net loss in its first result as a publicly-listed company, with expenses soaring 74 times from the same period last year as the company seeks to maintain a rapid pace of growth.
The three year-old company went public on Nasdaq in July after rapidly ascending China’s e-commerce landscape to become the third-largest e-commerce company in the country by market share, after Alibaba and JD.com. Pinduoduo pioneered the “team buying” model, where users can buy items at a discounted rate if they find another friend to make the same purchase.
Revenue for the company jumped 26 times to 2.7 billion yuan in the quarter ended June 30, up from 104.6 million yuan in the same period a year ago. Compared to the quarter ended March 31 this year, revenue nearly doubled.
However, the company posted 8.96 billion yuan in operating expenses, up 74 times from a year ago. The surge in expenses came from increased sales and marketing costs due to branding campaigns, online and offline adverts and promotions, as well as employee share-based compensation expenses.
Pinduoduo posted a net loss of 6.5 billion yuan, compared with a loss of 109.5 million yuan a year ago.