Tencent-Backed Pinduoduo’s Rally Is Tamed by Denial of Hong Kong Share Offering

WANG HAI

(Yicai Global) June 3 — An insider at Pinduoduo has refuted media reports of the Chinese e-commerce sensation’s alleged secondary listing plans in Hong Kong which had propelled an unparalleled stock price surge.

Pinduoduo’s intraday stock price [NASDAQ: PDD] climbed to USD69.73 last morning in New York, a historic high. After that, the shares retreated to close at USD67.30 with a market cap of USD80.6 billion. The peak is more than three times that of its initial public offering price from July 2018.

The bulk-buy platform’s cash flow is healthy and its capital reserve and income growth rate are good so the firm has not discussed listing plans with any third-party agencies, an insider at the Shanghai-based company told Yicai Global last evening, quickly after many Chinese news outlets reported rumors of share issuance.

Hong Kong has been calling Chinese tech firms amid tightening regulations in the US. In late May, Nasdaq-listed internet giant NetEase revealed its intentions to issue new shares in the special administrative region. E-commerce giant JD.Com has been rumored to have similar ideas, although the firm has not confirmed them.

Established in 2015, Pinduoduo has grown rapidly to become China’s fourth-largest internet company. Tech behemoth Tencent Holdings is the e-online marketplace’s second-largest shareholder.

Pinduoduo is burning through cash as its net loss more than doubled to CNY3.2 billion (USD450.9 million) in the first quarter from a year ago. Meanwhile, its operating income rose by 44 percent to CNY6.5 billion.

But the firm’s coffers are not empty. By the end of March, the Groupon-like platform had cash and cash equivalents worth CNY5.5 billion, and CNY27 billion (USD3.8 billion) in restricted cash, according to its earnings report.

Over the 12 months ended March 31, the company’s number of active buyers exceeded 600 million for the first time, rising by 42 percent from a year ago, amid a big marketing push.

Editor: Tang Shihua, Emmi Laine