Official listing on Nasdaq of Cathay Innovation’s
portfolio company Pinduoduo for a market value of USD 24bn
On July 26, 2018, Pinduoduo rang the opening bell simultaneously in Shanghai and New York, and was officially listed on the Nasdaq stock exchange, with a share price of USD 19 and a market value of USD 24bn. For the first time in history, the Nasdaq sent the beating bell button to Shanghai to welcome the fastest listing for a Chinese internet company. As a matter of fact, it took Pinduoduo only 2 years and 11 months from its creation in September 2015 to land on Nasdaq.
Such a fast outcome is justified by meteoric rise of the metrics of the company. As of June 31, 2018, PDD’s active users had reached 344 million in 12 months. In Q2 2018, the average MAU reached 195 million, which is a 17% increase compared to Q1 2018. Still as of June 31, 2018, PDD’s GMV had reached RMB 262.1bn and the average consumption per active user had increased from RMB 674 to RMB 763 in 12 months. In addition, the revenue of the PDD platform continued to maintain a rapid growth.
Such a steep growth in the field of commerce has never been seen in the history of the internet and humanity. It is worth mentioning that it took PDD’s GMV only 2 years to pass the 100 billion threshold while it took JD.com 15 years and Taobao 5 years.
Also, the bulk of the buyers are Chinese from Tier 3 and Tier 4 cities in China, who were not actively buying online because the offer hadn’t really satisfied their needs. Pinduoduo managed to make hundreds of millions of people enjoy the benefits of the digital commerce in a way at the same time more fun and economically attractive.
As a non-traditional company that combines material and spiritual consumptions, PDD is committed to becoming a combination of Costco and Disney. According to customers, the company sells “excellent products at a fair price” through the ultimate compression of the supply chain connecting customers directly with manufacturers. As for manufacturers, they think the model of “small SKU, high volume, blockbuster” is the best option to transform and upgrade traditional factories. In the past three years, PDD has added nearly 1,000 factory brands to its platform.
“The biggest value of PDD is to offer new solutions to the e-commerce industry. Its model has a strong potential of replication so we are confident that PDD will become an international company, the same way as Costco became the second largest retailer in the world. It is the first time in the history of China’s internet development that a business model like PDD was created and we are very pleased that Cathay Innovation is part of this success story”, said Mingpo CAI, Founder and President of Cathay.
Cathay Innovation has been an investor in the company very early on as it invested in PDD’s Series B round in 2016.