Pinduoduo stock jumps on positive Q4 results, consumer demand

Shares of Pinduoduo (PDD) jumped higher Wednesday morning as the company posted its fourth quarter earnings, beating Wall Street expectations. The company reported $2.23 per share against an expected $1.57 per share. One of its subsidiaries, Temu, claimed this was partly due to increased consumer demand.

Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest developments for Pinduoduo and what they could mean for the company moving forward.

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: We're tracking PDD, Pinduoduo shares surging this morning after reporting earnings and revenue far above expectations. Parent company of Temu here, saying growing demand in the quarter was driven by encouraging consumer sentiment. Probably also helps when you run 15 Super Bowl Ads as well.

SEANA SMITH: Yeah.

BRAD SMITH: No doubt. The shares benefiting reacting positively here they're up by about 9, 10% as of now.

SEANA SMITH: Yeah. It was tough to miss a Temu Ad during the Super Bowl. They certainly ran many of those games. They have been upping their spending. Their marketing spend. Here in the US. At least seems to be paying off when you take a look at these results.

And they've also been spending or their spend was far beyond the Super Bowl. When you talk about their ad platforms, including Meta and Alphabet's Google. They were continuing to increase their spend here in the US competition with Amazon. We'll talk about this a little bit later. But Amazon actually launching its first spring sale is what they're calling it.

And many analysts are saying, they're doing it because of increased competition from Temu. From some of these Chinese e-commerce players here. So they are able or they are starting-- and have been taking market share here. And they're finding-- they are resonating I should say, with American consumers and it's paying off.

- They're trying to get me finally. They know I don't have Prime, they're trying to finally get me to sign up for Prime here. Eventually at some point I mean, but just getting me into the ecosystem and making my first Amazon purchase.

Maybe that's what I do on the sale day, maybe we'll see. But for Pinduoduo, I mean, no doubt, when you take a look at some of the results the increase of 123% in total revenues, that no doubt should catch a few eyes out there as well. They said 2023, represented a pivotal chapter in the corporate history transitioning towards high quality development.

And then additionally in 2024, remaining dedicated to further improving consumer experiences, enhancing technology innovation. That sounds maybe a little bit of CapEx could be thrown into the mix there. And then generating positive impacts in communities, we'll see exactly what that means going forward from here. But high quality development strategy is what they are really trying to pound the pavement on and linger on here, in the message too.

SEANA SMITH: Yeah. I think those numbers that you just rattled off is pretty much a blowout report from many of the metrics that we did see, we're seeing that reaction. And also keep in mind they're doing this at a time when China's economy is still struggling, when the consumer doesn't have much spending power here. So they're able to scale their business in other parts of the world and is being able to offset some of the slowdown that we have seen still play out.

BRAD SMITH: Yeah. We did get some interesting data out from China to start off the week, showing that at least industrials and retail came in above expectations. But again, that is the nation state data. So we'll see exactly where it continues to show up in some of the corporate data, as well here. And just pair them together.