When Can We Expect A Profit From Pinduoduo Inc. (NASDAQ:PDD)?
Pinduoduo Inc.'s (NASDAQ:PDD): Pinduoduo Inc., through its subsidiaries, operates an e-commerce platform in the People's Republic of China. The company’s loss has recently broadened since it announced a CN¥7.0b loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥9.2b, moving it further away from breakeven. Many investors are wondering the rate at which PDD will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PDD.
Check out our latest analysis for Pinduoduo
PDD is bordering on breakeven, according to the 32 Online Retail analysts. They expect the company to post a final loss in 2020, before turning a profit of CN¥2.5b in 2021. Therefore, PDD is expected to breakeven roughly a couple of months from now! How fast will PDD have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 103% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for PDD given that this is a high-level summary, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I’d like to point out is that PDD has managed its capital prudently, with debt making up 35% of equity. This means that PDD has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of PDD to cover in one brief article, but the key fundamentals for the company can all be found in one place – PDD’s company page on Simply Wall St. I’ve also compiled a list of important factors you should look at:
Valuation: What is PDD worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether PDD is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Pinduoduo’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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