On November 30th, Red Star Capital Bureau reported that on November 29th local time in the United States, Pinduoduo (PDD. US) briefly rose after the opening of the US stock market, up more than 4%, with a market value of $192 billion, surpassing Alibaba (BABA. US) to become the highest valued Chinese concept stock in the US stock market. However, by the close of the day, Alibaba's market value had reversed. Pinduoduo's closing gain narrowed to 1.96%, at $141.730 per share, with a market value of $188.3 billion; Alibaba closed down 2.70% at $74.670 per share, with a market value of $190.2 billion.
The day before, Pinduoduo released its third quarter financial report, achieving a revenue of 68.84 billion yuan, a year-on-year increase of 94%, significantly exceeding market estimates. According to the financial report, Pinduoduo achieved a net profit of 15.54 billion yuan under the US GAAP standard in the third quarter, with a net profit margin of 22.6%. According to financial reports (calculated based on a total revenue of 158.8 billion yuan in the first three quarters of 2023), the average revenue per employee of Pinduoduo in the first three quarters was 12.22 million yuan, 7.07 times that of JD.com in the same period, and an estimated 4.17 times that of Alibaba; The per capita operating profit is 55.8 times that of JD.com and is estimated to be 5.81 times that of Alibaba.
The Red Star Capital Bureau has noticed that the market value of Pinduoduo once surpassed Alibaba, which is considered a historically significant event. This not only means that the Chinese e-commerce landscape has undergone new changes, but also reflects investors' optimism about the future of the two major e-commerce platforms, Alibaba and Pinduoduo.
Jiang Han, a senior researcher at Pangu Think Tank, believes in an interview with the Red Star Capital Bureau that Pinduoduo's market value once surpassed Alibaba, indicating increasingly fierce market competition. Pinduoduo has won a large number of users with its unique social e-commerce model and low price strategy, posing certain competitive pressure on traditional e-commerce platforms such as Alibaba. Jiang Han believes that this phenomenon also reflects the different views and expectations of investors towards Pinduoduo and Alibaba. Investors may believe that Pinduoduo's innovative model and future development potential are greater, therefore giving it a higher valuation. Although Alibaba's business is diverse and mature, it may face some growth pressures.
However, Jiang Han reminds that changes in market value are influenced by investor sentiment and market fluctuations. In the short term, investors may be optimistic about the prospects of Pinduoduo, leading to an increase in its market value. However, this change may be temporary and requires observation of long-term market trends and company performance. From a long-term perspective, the e-commerce market still has enormous growth potential. Pinduoduo and Alibaba both need to constantly innovate and improve to adapt to market changes and meet user needs.
Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center at the International Business School of Zhejiang University, stated that the impression of Pinduoduo being cheap has a negative impact on its long-term development. Pinduoduo's competitors should be quality e-commerce, such as JD.com, because this is the two ends of e-commerce. Pinduoduo is extremely cheap and competing with JD.com for quality after-sales service. There are many factors that contribute to Alibaba's market value decline, which is not entirely due to e-commerce. So, Pan and Lin believe that this time is not a node. In terms of sales model, Pinduoduo's low-cost model is also very fragile. If market regulation really wants to focus on product quality, then this model will encounter backlash.