Social and e-commerce platform Pinduoduo officially announced on June 30th that it has submitted a prospectus to the US Securities and Exchange Commission (SEC).
Pinduoduo plans to raise up to USD1 billion through an initial public offering (IPO) to be jointly underwritten by UBS, Goldman Sachs and China International Capital Corporation (CICC). The issuance price, circulation volume and stock exchange are yet to be determined.
The prospectus shows that by the end of the first quarter of 2018, Pinduoduo’s transaction volume had reached RMB198.7 billion yuan, with 295 million active buyers and 1 million active merchants, user numbers surpassing those of rival Chinese e-commerce company VIPshop and ranking third only to Taobao and JD.com.
Pinduoduo’s current revenue is sourced mainly from online marketing services including advertising and commission from sales. In 2017, revenue reached RMB1.7441 billion (USD278 million), representing a year-on-year increase of 245% from RMB505 million in 2016. Revenue in 1Q 2018 was RMB1.3486 billion (USD220.7 million), compared with 37 million yuan in 1Q 2017, an increase of about 37 times.
Pindouduo’s net losses have accumulated, first from RMB 292 million in 2016 to RMB525.1 million (approximately USD83.7 million) in 2017; due to substantial market expansion, sales and market expenses in 1Q 2018 hit RMB 1.217 billion, including a net loss of RMB201 million in a single quarter.
In April 2018, Pinduoduo acquired approximately USD3 billion of Series C financing from Tencent Industry Gongying Fund and Sequoia Capital China, representing a valuation of approximately USD15 billion.
According to the prospectus, among Pinduoduo’s major shareholders, entities related to the company's founder, chairman and CEO Huang Zheng, hold 50.7% of the total shares, with Tencent-related entities 18.5%, Gaorong Capital 10.1% and Sequoia Capital China 7.4%.
Huang Zheng wrote in his letter to shareholders that Pinduoduo represents a hybrid of Costco and Disney (equating to a consolidation of cost-effective products and entertainment).
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