PDD - Pinduoduo Inc.

[Longnose]

Noticed that Li Lu took a small stake in PDD on his most recent 13f. I watch quite a few Chinese e-commerce players. The China e-comm market still has an incredibly long runway in front of it.

 

Anyone else looked at PDD? I would like to start a discussion around this company.

[RadMan24]

Never heard of it until today, but at a minimum might be worth reading up on it in due course to see what China's tech is up to.

[Spekulatius]

Never heard of it until today, but at a minimum might be worth reading up on it in due course to see what China's tech is up to.

 

PDD is MLM which raises some concerns for me. So far, it has worked out well.

[winjitsu]

 

PDD is MLM which raises some concerns for me. So far, it has worked out well.

 

Cultural context is needed here. Group buys are very common in the Sinophere. Not uncommon to get a email from your coworkers to your company listserv asking if people want to join in on a group buy for mattresses, moon cakes etc.

[Longnose]

 

PDD is MLM which raises some concerns for me. So far, it has worked out well.

 

Cultural context is needed here. Group buys are very common in the Sinophere. Not uncommon to get a email from your coworkers to your company listserv asking if people want to join in on a group buy for mattresses, moon cakes etc.

 

I think cultural context is very important with Chinese companies. I was talking with a friend recently about Chinese e-comm and how it differs from e-comm as we think about it here in the USA. We were discussing a recent business transaction I did on Alibaba.com and how there is still a lot of room for negotiation and talking between buyer and seller. I believe this "market" atmosphere is still important to many consumers in china who may like to haggle on prices. I was also talking to another APAC ecomm expert on about $BILI - Bilibili. They were discussing how its important for brands to start marketing on BILI for growth in china but they need to have ad campaigns designed specifically for this platform and how important it is to get the cultural context right.

 

I am quite familiar with BABA having used several of its platforms. But PDD is one that I still need to better understand.

[winjitsu]

 

I think cultural context is very important with Chinese companies. I was talking with a friend recently about Chinese e-comm and how it differs from e-comm as we think about it here in the USA. We were discussing a recent business transaction I did on Alibaba.com and how there is still a lot of room for negotiation and talking between buyer and seller. I believe this "market" atmosphere is still important to many consumers in china who may like to haggle on prices. I was also talking to another APAC ecomm expert on about $BILI - Bilibili. They were discussing how its important for brands to start marketing on BILI for growth in china but they need to have ad campaigns designed specifically for this platform and how important it is to get the cultural context right.

 

I am quite familiar with BABA having used several of its platforms. But PDD is one that I still need to better understand.

 

There was a VC that lamented missing out on PDD because he thought BABA/taobao would eat it's lunch. He realized that tier-1/tier-2 cities have much different habits than tier-3/tier-4 cities where PDD thrives. Perhaps a starting point for your DD if you can find who said that and the rest of his thinking.

[Borgesian]

Two good pieces on PDD:

 

https://turner.substack.com/p/pinduoduo-and-vertically-integrated

 

https://anuhariharan.substack.com/p/pinduoduo-and-the-rise-of-social

[thowed]

This from a China manager I respect:

 

'Nevertheless, companies in China are still growing – albeit some at more sustainable levels than others. Pinduoduo, a Chinese online platform which combines value-for-money goods with social e-commerce, grew revenues by 650% in 2018. Sales more than doubled in 2019. However, the company has been burning through its cash with coupons, incentives and promotions to acquire users. It also has only a short track record, having listed in 2018. We found it difficult to put a value on such a business; and with no sign of profitability in the near term, we deemed the company uninvestible.'

 

I saw the Li Lu thing too, so now don't know what to think.

[Lollapalooza]

I share Thowed's view.

I've owned this stock for a very short period until mgt hinted they dont expect profitability soon and need to raise capital to build their own logistic network to enable the food delivery venture.

I love their concept though. It really seems aimed at having fun and leveraging other users buying power.

[arcube]

This has been a wonderful performer in my mother’s IRA. Some helpful info below.

 

https://diane.substack.com/p/social-commerce-is-the-future

[abyli]

We wrote this two years ago....

 

https://seekingalpha.com/article/4240657-linden-rose-investment-2018-annual-letter#comment-88039106

 

 

[coc]

PDD is interesting but keep in mind Li Lu manages perhaps $15-20 billion. It's a tiny position. He also bought a small position in Apple at 30x earnings. I don't know exactly what these represent but I'm not sure I'd read deeply into it.

[cameronfen]

 

I think cultural context is very important with Chinese companies. I was talking with a friend recently about Chinese e-comm and how it differs from e-comm as we think about it here in the USA. We were discussing a recent business transaction I did on Alibaba.com and how there is still a lot of room for negotiation and talking between buyer and seller. I believe this "market" atmosphere is still important to many consumers in china who may like to haggle on prices. I was also talking to another APAC ecomm expert on about $BILI - Bilibili. They were discussing how its important for brands to start marketing on BILI for growth in china but they need to have ad campaigns designed specifically for this platform and how important it is to get the cultural context right.

 

I am quite familiar with BABA having used several of its platforms. But PDD is one that I still need to better understand.

 

There was a VC that lamented missing out on PDD because he thought BABA/taobao would eat it's lunch. He realized that tier-1/tier-2 cities have much different habits than tier-3/tier-4 cities where PDD thrives. Perhaps a starting point for your DD if you can find who said that and the rest of his thinking.

 

It’s worth noting that my aunts/uncles/cousins are mainly in Shanghai and Hong Kong, and apparently it’s all the rage in those places too. 

[Longnose]

Two good pieces on PDD:

 

https://turner.substack.com/p/pinduoduo-and-vertically-integrated

 

https://anuhariharan.substack.com/p/pinduoduo-and-the-rise-of-social

 

Thanks so much for these. They are incredibly good write ups on the bull case.

 

So far I am feeling like the bear case is can they get to profitability and maintain it. Also, is the Pindoudou app just a fad and will they retain users.

 

And then there is always "are the numbers real" like the Luckin Coffee issue.