Company: Pinduoduo Inc.
Symbol: PDD
Description: They are an innovative and fast growing new e-commerce platform that provides buyers with value-for-money merchandise and fun and interactive shopping experiences.
Trade Date: 7/26
Shares: 85.6 million ADSs
Price Range: $16.00-$19.00
Underwriter(s): Credit Suisse, Goldman Sachs (Asia), CICC, China Renaissance
Business: Their Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks as an effective and efficient tool for buyer acquisition and engagement. As a result of their innovative business model, they have been able to quickly expand their buyer base and establish their brand recognition and market position. They are one of the leading Chinese e-commerce players in terms of GMV and the number of total orders. Their GMV in 2017 and the twelve-month period ended June 30, 2018 was RMB141.2 billion and RMB262.1 billion (US$41.8 billion), respectively. In 2017 and the first quarter of 2018, the number of total orders placed on their Pinduoduo mobile platform reached 4.3 billion and 1.7 billion, respectively.
Financials: They have experienced substantial growth since their inception in 2015. In addition to their marketplace services, they also operated an online direct sales business from which they derived a substantial majority of their revenues from 2015 to 2016. This business no longer generates revenues after they fully transitioned into their current marketplace model in the first quarter of 2017. They currently generate revenues primarily from online marketplace services. Their revenues grew from RMB504.9 million in 2016 to RMB1,744.1 million (US$278.0 million) in 2017, and grew from RMB37.0 million in the three months ended March 31, 2017 to RMB1,384.6 million (US$220.7 million) in the same period in 2018. They incurred net loss of RMB292.0 million and RMB525.1 million (US$83.7 million) in 2016 and 2017, respectively. They incurred net loss of RMB201.0 million (US$32.0 million) in the three months ended March 31, 2018, compared to net loss of RMB207.7 million in the three months ended March 31, 2017.
Insider Buying: Tencent Holdings Limited and Sequoia Capital, two of their principal shareholders, have indicated an interest in purchasing up to US$250 million and US$250 million, respectively, of the ADSs representing Class A ordinary shares in this offering at the initial public offering price and on the same terms as the other ADSs being offered.
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