Pinduoduo's market value is approaching Alibaba.
On November 28th, the US stock market Pinduoduo closed up 18%, with a year-on-year increase of 70.45%. Based on a closing price of $139, its market value reached $184.7 billion.
Pinduoduo is also one of the Chinese concept stocks with the largest increase in stock prices in 2023. However, Alibaba and JD.com, both giants in the e-commerce industry, have experienced a sharp decline in their stock prices, with prices falling 12.88% and 49.1% respectively this year. Their latest market values were $195.4 billion and $38.5 billion, respectively.
Pinduoduo's market value is approaching or even expected to surpass Alibaba, and the Chinese e-commerce landscape is once again changing, sparking heated discussions among Alibaba employees on the company's intranet. Jack Ma replied to a related post on Alibaba's intranet, congratulating PDD (Pinduoduo) on its decision-making, execution, and efforts in the past few years. The era of AI e-commerce has just begun, and it is both an opportunity and a challenge for everyone. He firmly believes that Alibaba will change, and Alibaba will change.
Pinduoduo's stock price surged 18% overnight
On November 28th, Pinduoduo released its financial report for the third quarter of 2023 as of September 30th. In the quarter, Pinduoduo achieved a revenue of 68.84 billion yuan, a year-on-year increase of 93.9%. The net profit under the US GAAP standard was 15.54 billion yuan, with a net profit margin of 22.6%.
Among them, Pinduoduo's transaction service revenue reached as high as 29.152 billion yuan, a year-on-year increase of 315.15%, with a remarkable growth rate. Online marketing, as its main source of revenue, reached 39.687 billion yuan, a year-on-year increase of 39.62%.
It is understood that Pinduoduo's trading service revenue may mainly come from the high growth of its overseas business, Temu. In September 2022, Pinduoduo launched the cross-border e-commerce platform Temu, which quickly grew and became the most eye-catching new player in the global e-commerce market as soon as it was launched.
The world's more mature cross-border e-commerce platforms include Amazon, AliExpress, etc., but they adopt a merchant independent business model. Pinduoduo's Temu is different from it in that it adopts a fully managed model, where merchants only need to send their goods to Temu's domestic transit warehouse, and the remaining logistics, promotion, and investment are fully managed by the Temu platform.
Temu has been online in 47 countries worldwide in just over a year since its official debut, with a mobile app download count of up to 200 million times. The success of Temu lies not only in its different business models, but also in its rapid expansion, which is inseparable from its strategy of low price sales and fission marketing.
Pinduoduo's low price subsidies and user fission tactics continue on Temu. It is reported that the name Temu comes from the first half of the sentence "Team up, price down". "Team up, price down" is the slogan of Temu in the app store, which is similar to "Buy with all your might to get cheaper". Temu's marketing activities also include new gifts from Pinduoduola and "cutting a knife".
Temu dares to use real money to enhance its attractiveness and influence, such as initially implementing a zero service fee policy for merchants and collaborating with internet celebrities, and even spending $14 million on advertising during the 2023 Super Bowl.
For Temu, Pinduoduo did not disclose any data on Temu's revenue, costs, or marketing investment in its financial and performance reports. However, despite the rapid expansion of Temu's platform users and sales, the high marketing costs make it difficult for it to turn losses into profits in the short term.
Perhaps because Temu's business is located overseas and its popularity in China is not high, domestic investors are not very familiar with Pinduoduo's influence abroad.
Affected by the excellent performance of Pinduoduo in the third quarter, the US stock market closed up 18% on November 28th, with a year-on-year increase of 70.45%. Based on the closing price of $139, the market value of Pinduoduo reached $184.7 billion.
Jack Ma: Congratulations to Pinduoduo, I believe Alibaba will change
Alibaba and JD.com, both giants in the e-commerce industry, have experienced a sharp decline in stock prices this year, with prices falling 12.88% and 49.1% respectively. Their latest market values were $195.4 billion and $44.8 billion, respectively.
Pinduoduo's market value skyrocketed overnight, approaching Alibaba and more than four times JD's market value. This news has sparked heated discussions among Alibaba employees on the company's intranet.
An Alibaba employee wrote in an internal post, "It's hard to sleep at this moment, and I can't even imagine that Pinduoduo's market value was less than 10 billion US dollars away from Alibaba's market value at one point. I was really startled, and that inconspicuous person is about to become the big brother. Posting is used as my encouragement, hoping to work together to contribute and continue to surpass.".
Jack Ma replied to the above post as a partner on Alibaba's intranet, congratulating Pinduoduo on its decisions, execution, and efforts over the past few years. All great companies were born in winter, and the era of AI e-commerce has just begun. It is both an opportunity and a challenge for everyone. Everyone has been brilliant, but only those who can reform for the future of Tianniu and are willing to pay any price or sacrifice are respected. Jack Ma also expressed that please provide more constructive opinions and suggestions, especially innovative ideas. He believes that today's Alibaba people are all watching and listening, and he is even more convinced that Alibaba will change. "Returning to Alibaba's mission and vision, come on!" Jack Ma firmly believes that Alibaba will change, and Alibaba will change.
Institutions have recently lowered Alibaba's performance expectations
As Jack Ma stated in his post, he firmly believes that Alibaba will change. Currently, Alibaba is facing strategic adjustments in various business lines and a decline in some of its main businesses.
The latest research report from Bank of Communications International pointed out that it is expected that the GMV/CMR growth rate of Taotian E-commerce in the fourth quarter of 2023 will be 5.5%, which is slightly lower than the industry's overall growth rate of about 9%, and slightly lower than previous expectations. Mainly considering that under Alibaba's pricing power product strategy, the average price per unit may decrease, and the GMV growth rate is lower than the order volume growth rate. According to analysis, it is expected that the GMV growth rate of Taotian e-commerce will still be lower than the overall market growth in 2024, with an estimated growth rate of about 5% (while the overall market/JD growth rate is expected to be 8%).
Alibaba previously stated that, considering the uncertainty brought by recent US chip restrictions, it will no longer completely divest its cloud business. Puyin International believes that this may partially offset the valuation release brought by previous news. In addition, with recent changes in management, the company is still in the exploratory phase. Cloud revenue has not shown any improvement, increasing by 2% year-on-year to 27.6 billion yuan, while external customer revenue has decreased year-on-year.
Puyin International stated that considering the relatively weak recovery of Alibaba's core e-commerce business, it will lower its adjusted net profit for the next two years. At the same time, the company has temporarily suspended the plan to spin off and list some of its businesses, which has to some extent offset the valuation release brought by previous news and simultaneously lowered the company's target price.
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