Pinduoduo's turning point

$PDD(PDD.US)

This is Pinduoduo's first positive public statement since August 2024.

Today is Pinduoduo's annual shareholders' meeting, where it unusually released information about the meeting. Although the content is brief, it is sufficient.

Three main points: Zhao Jiazhen and Chen Lei were appointed as co-chairmen and co-CEOs, promoting Zhao; affirmed Zhao Jiazhen's achievements since becoming co-CEO; and for the first time announced TEMU's three-year goal to "rebuild another Pinduoduo."

This is Pinduoduo's first positive public statement since August 2024.

It is highly significant.

Let’s examine each point in detail.

On December 19, Pinduoduo Group announced the implementation of a co-chairman system at its annual shareholders' meeting and appointed Zhao Jiazhen as co-chairman, serving alongside Chen Lei as co-chairman and co-CEOs.

Analysis:

The setup of co-CEOs and co-chairmen is generally seen as a transitional arrangement for power transfer. Having both co-CEOs and co-chairmen is rare.

Chen Lei is a veteran of the company, born in 1979, now only 46 years old, one year older than Huang Zheng. He studied in the U.S. and worked at Google, overlapping with Huang Zheng. In the early days of Pinduoduo, when Huang Zheng served as founder and CEO, Chen Lei was the CTO, a key leader in technology and product development. After Huang Zheng resigned as chairman in March 2021, Chen Lei took over as CEO and chairman.

Zhao Jiazhen, born in the 1980s, is internally regarded as a "new-generation leader." In 2020, he spearheaded the launch of Duoduo Maicai (a grocery business) and drove supply chain upgrades. With multiple achievements, he became co-CEO in April 2023 and now continues as co-chairman, effectively matching Chen Lei's status in the company. This signals that Zhao Jiazhen will take over as Pinduoduo's next-phase leader.

Since Zhao Jiazhen became co-CEO, Pinduoduo has fully transitioned into a new phase of high-quality development for its platform and ecosystem. "Our supply chain has become a key pillar supporting the entire platform and related ecosystem, enabling more people to enjoy the inclusivity and convenience brought by new e-commerce," Chen Lei said.

Analysis:

This affirms Zhao Jiazhen's achievements since becoming co-CEO.

This is no small feat, as just a few quarters ago, Pinduoduo admitted at a public earnings call that "while our team is gradually aging, we have shortcomings in our capabilities and may miss some opportunities when facing certain changes."

Over the past two years, Zhao Jiazhen's tenure as CEO has been full of challenges—launching TEMU from scratch, facing overseas regulatory hurdles, and navigating domestic business turbulence. Achieving the current business results is remarkable, especially given the strong talent within Pinduoduo.

Looking closely at Zhao Jiazhen's experience, the keyword is only one: supply chain.

Starting with Duoduo Maicai, he led pilot projects in Nanchang, optimized cold storage, built front-end warehouses, and explored new paths. Despite competition from giants, he successfully secured Duoduo Maicai's first city. Grocery is a highly supply-chain-intensive business, and Zhao Jiazhen gained invaluable experience here. This is why he directly handled U.S. merchant acquisition for TEMU, as TEMU is also a supply-chain-heavy model.

The company's evaluation of Zhao Jiazhen is that he has long been "embedded" in frontline operations, with a unique and profound understanding of user needs, supply chain optimization, and platform strategy. He excels at breakthroughs and capturing opportunities amid competition.

With Zhao Jiazhen, who rose from frontline operations, continuing to lead Pinduoduo, I believe the next decade is secure.

After being appointed co-chairman, Zhao Jiazhen stated, "Over the past few years, TEMU has achieved remarkable scale at a pace that even surprised us. This is a critical leap driven by the dividends of China's supply chain industry and has also created new opportunities for the development of domestic supply chains, as well as for Pinduoduo and TEMU's next phase of rebuilding. 'We will focus our energy, financial resources, and efforts on upgrading and rebuilding China's supply chain, achieving a holistic upgrade in supply chain operations. High quality and branding are our direction. We believe that in the next three years, we will have the opportunity to rebuild another Pinduoduo.'"

Analysis:

First, TEMU's past success is attributed to the industrial dividends of China's supply chain. Positioning this correctly is crucial. "Surprising speed" and "remarkable scale"—Pinduoduo's self-affirmation is somewhat uncharacteristic.

Second, it outlines the direction for future efforts. "Investing in the upgrade and rebuilding of China's supply chain to achieve a holistic upgrade in supply chain operations"—Pinduoduo's industrial focus is on supply chain upgrades, moving beyond the "low-price" narrative of the previous phase. Pinduoduo says this and indeed does it, though shifting the narrative takes time.

Third, it provides a concrete goal. Pinduoduo has never detailed TEMU before, only updating progress in annual reports. This is the first time Pinduoduo has publicly stated TEMU's goal: "Rebuild another Pinduoduo in three years." What does "rebuild another Pinduoduo" mean? Is it Pinduoduo's 1 billion annual active buyers by 2025, or 5 trillion GMV, 300 billion revenue, 100 billion profit, or 1 trillion market cap? The specific target doesn’t matter, as it’s a very positive figure not yet priced into the stock.

Recall August 2024, when Pinduoduo first shorted itself—many didn’t believe it, and the stock rebounded 50% in a month. Since then, business has fluctuated as management predicted, and the stock has experienced prolonged volatility.

This time, Pinduoduo's first positive public statement may mark another turning point.