In the third quarter, the revenue growth of Pinduoduo was significantly higher than that of Alibaba, as customers search for low-cost items. On Tuesday, the company, which is renowned for its inexpensive items, revealed a 90+% upsurge in revenue from the same period last year - beating forecasts from the London Stock Exchange Group. Pinduoduo's flourishing earnings stands in sharp contrast to the tepid expansion seen in the quarter at rival Chinese e-commerce firms Alibaba and JD.com.
Chinese shoppers are on the hunt for deals, evident from the latest earnings from online merchants. Pinduoduo - known for its low-priced wares - reported a 94% rise in its third quarter revenue, vastly surpassing Alibaba's 9% growth during the same period. Tuesday, Pinduoduo disclosed that its third quarter revenue was worth $9.44 billion, and its transactions saw a 315% surge. Its shares surged by 18% in US trading. Pinduoduo is also the parent company of Temu, a worldwide online retail company that is quickly growing. We learned from the company that Temu had already reached customers in over 40 countries. JPMorgan has projected that despite losses, Temu would generate a gross merchandise volume of 70 billion yuan ($957 million) by the end of 2020, and this is expected to double by 2024. Temu was first launched in the US in September 2019, and it soon became popular with consumers who are mindful of their budget. The app has since expanded to countries like Australia, France, Italy, Germany, the Netherlands, Spain, and the UK. This contrasts with the slow growth in Q3 reported by other Chinese e-commerce companies - Alibaba and JD.com - who usually offer higher-priced items and remain major forces in the industry. Though Alibaba recorded revenue growth of 9% y/y (estimated at around $31 billion), its net income for the same period missed the mark. JD also missed its Q3 revenue estimates, while its net revenue for the quarter was 1.7% up y/y at the equivalent of $34 billion.
Meituan, the food delivery giant, reported on Tuesday that their revenue had increased 22.1%, to $10.81 billion in the third quarter, from the same period a year prior and their adjusted net profit had risen 62.4%. Despite these positive results, however, their HK-listed shares fell 12% on Wednesday, the most of any company on the Hang Seng Index. CFO Shao Hui Chen noted on the earnings call that consumer preferences have changed during the pandemic, tending to be more cost-conscious and looking for "value for money," while the unusually warm autumn has also seen a decrease in deliveries. Chen further said that Q4 revenue year-over-year growth of the food delivery business is expected to be lower than the Q3 growth rate. Economic analysts have noted that, while spending has increased, people are being more cautious when it comes to how they are allocating their funds, and the level of consumption is still lower than before Covid-19.
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