Author | Wang Xiaojuan
Editor | Zhou Zhiyu
Pinduoduo, which has always surprised the market, experienced its largest single-day decline in nearly two years after releasing its second-quarter report.
The performance fell short of expectations, and the management's statement on sacrificing short-term profits caused Pinduoduo's stock price to drop below $100 per share on August 27, with a decline of over 30%. As of the time of writing, the lowest stock price was $95.86 per share, still experiencing intense fluctuations.
Pinduoduo's financial report for the second quarter of 2024 showed a revenue of 97.1 billion yuan, an 86% year-on-year increase, approaching the one trillion mark; adjusted operating profit was 34.987 billion yuan, a 139% year-on-year increase.
Although some data, including revenue, fell slightly below market expectations, overall, this is still a report card showing rapid growth.
However, facing changes in the e-commerce landscape, Pinduoduo is prepared to sacrifice short-term profits for long-term investment. The management also stated that they are willing to pay the price for long-term health at present.
During the financial report conference call, Pinduoduo's founder and CEO, Chen Lei, stated that the profit growth in the past few quarters was a result of the asynchrony between short-term investment cycles and financial reporting cycles, and should not be seen as a long-term trend.
Specifically, Pinduoduo's main revenue still comes from merchant commission income and advertising revenue. This quarter, transaction service revenue (commission) was 47.94 billion yuan, a year-on-year increase of over 230%, while marketing services and other services (advertising) revenue was 49.12 billion yuan, with a year-on-year growth rate of 29%, showing some slowdown.
The market's concern lies in the changes in the e-commerce landscape, and Pinduoduo must also face the current challenges. Recently, apart from JD.com, platforms like Taobao and Douyin e-commerce are no longer emphasizing low prices excessively, but are focusing on GMV growth again, returning to the interests of merchants, and enhancing service capabilities.
Chen Lei also mentioned that Pinduoduo will not engage in share buybacks or dividends in the next few years, but will allocate 10 billion yuan to support high-quality merchants and improve platform ecosystem construction.
Specifically, this includes vigorously supporting new high-quality merchants with product and technological innovation capabilities, significantly reducing transaction fees for high-quality merchants, continuously strengthening positive incentives for high-quality ecological development, and comprehensively improving the quality and efficiency of the upstream supply chain.
Recently, Pinduoduo has also introduced resource position technology service fees and promotion software service fees with refundable benefits for merchants.
Zhao Jiazhen, Executive Director and Co-CEO of Pinduoduo Group, stated that sacrificing short-term profits is necessary in creating a more effective and healthier ecosystem for new high-quality merchants. The management has reached a consensus and is willing to pay a significant current price for long-term health. Profits in the next few quarters may fluctuate and rebound, but the inevitable trend is a decrease in long-term profits.
Intense competition in the e-commerce market still exists, and all players need to adopt longer-term strategies to navigate through the cycles.
As Zhao Jiazhen mentioned, Pinduoduo's commitment to building a healthy and sustainable platform ecosystem will not change. Along this path, Pinduoduo will inevitably pay the price for growth, but for long-term health, the management team will unite and build the platform ecosystem
After this baptism, Pinduoduo may, as Chen Lei said, be prepared for long-term investment, continuously cultivate internal strength, actively explore technological and model innovations, and embrace market competition and various challenges

- Pinduoduo faced its largest single-day drop in nearly two years post its Q2 report, with stock prices plummeting over 30% on August 27, hitting a low of $95.86 per share amidst lower-than-expected performance and management's stance on sacrificing short-term profits.
- Q2 2024 financial report revealed revenue of 971 billion RMB, an 86% YoY increase, with operating profit at 349.87 billion RMB, up 139% YoY, signaling strong growth despite slightly missing market expectations.
- Pinduoduo prepares to sacrifice short-term profits for long-term investment amidst evolving e-commerce landscape, focusing on supporting quality merchants and enhancing platform ecosystem, anticipating fluctuations in future profits but aiming for sustained growth.

Pinduoduo's stock price plunges 30% intraday