Pinduoduo Inc. (NASDAQ:PDD) Is Expected To Breakeven In The Near Future
We feel now is a pretty good time to analyse Pinduoduo Inc.'s (NASDAQ:PDD) business as it appears the company may be on the cusp of a considerable accomplishment. Pinduoduo Inc., through its subsidiaries, operates an e-commerce platform in the People's Republic of China. The US$126b market-cap company posted a loss in its most recent financial year of CN¥7.2b and a latest trailing-twelve-month loss of CN¥2.7b shrinking the gap between loss and breakeven. The most pressing concern for investors is Pinduoduo's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Pinduoduo
Consensus from 34 of the American Online Retail analysts is that Pinduoduo is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CN¥2.6b in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 59% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Pinduoduo's growth isn’t the focus of this broad overview, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 17% of equity. This means that it 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 key fundamentals of Pinduoduo which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Pinduoduo, take a look at Pinduoduo's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Valuation: What is Pinduoduo 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 Pinduoduo 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 background.
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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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