On Wednesday, Citi reaffirmed its Buy rating on Pinduoduo Inc. (NASDAQ:PDD), maintaining a $185.00 price target. Pinduoduo reported impressive first-quarter results for 2024, surpassing estimates with total revenue soaring 131% year-over-year to Rmb86.8 billion.
This performance exceeded both Citi's projection of Rmb72.8 billion and the consensus estimate of Rmb76.9 billion. The surge in revenue was attributed primarily to transaction services, which grew 327% year-over-year to Rmb44.4 billion, outpacing Citi's estimate by 36%.
The company's online marketing services and other revenues also exceeded expectations, increasing 56% year-over-year to Rmb42.5 billion, or 5.5% higher than Citi's estimate of Rmb40.2 billion.
This robust top-line growth, coupled with a higher Gross Profit Margin (GPM) and consistent Sales & Marketing (S&M) and Research & Development (R&D) expenses—despite an increase in General & Administrative (G&A) costs—propelled non-GAAP net profit attributable to ordinary shareholders to Rmb30.6 billion.
This figure represents a 202% increase year-over-year and is significantly higher than Citi's forecast of Rmb17.4 billion and the street estimate of Rmb15.5 billion.
The non-GAAP operating profit for Pinduoduo also saw a substantial year-over-year increase of 237% to Rmb28.6 billion, surpassing Citi's estimate of Rmb17.1 billion. Furthermore, the company's S&M spending improved, dropping to 27% of revenues compared to 30% in the previous quarter and below Citi's estimated 31%.
Pinduoduo's financial performance in the first quarter of 2024 indicates a strong growth trajectory, with significant increases in key revenue streams and profitability metrics. The company's ability to control costs while expanding its revenue base has contributed to its better-than-expected financial outcomes.
InvestingPro Insights
Pinduoduo Inc. (NASDAQ:PDD) has demonstrated a formidable financial performance in the first quarter of 2024, with Citi maintaining a bullish stance on the company. To further understand Pinduoduo's market position, let's consider some key metrics and insights from InvestingPro. With a market capitalization of $202.0 billion and a P/E ratio that has adjusted to 24.36, the company showcases stability in the eyes of investors. The revenue growth is particularly striking, with an 89.68% increase over the last twelve months as of Q1 2023, indicating a robust expansion in Pinduoduo's business operations.
InvestingPro Tips highlight that Pinduoduo holds more cash than debt on its balance sheet and analysts are expecting sales growth in the current year. These factors, combined with impressive gross profit margins of 62.96%, contribute to the company's strong financial health and potential for sustained growth.
Additionally, with a high return of 130.73% over the last year, Pinduoduo's investment appeal is evident. The company's trading at a high revenue valuation multiple, which may suggest optimism about future growth prospects. Moreover, Pinduoduo's liquid assets exceed its short-term obligations, underscoring its financial resilience.
For readers looking to delve deeper into Pinduoduo's financials and future prospects, InvestingPro offers additional insights. There are 17 more InvestingPro Tips available for Pinduoduo, which can be accessed by visiting https://www.investing.com/pro/PDD. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to get an additional 10% off. These tips could provide valuable context for investors considering Pinduoduo as part of their investment portfolio.
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