- Pinduoduo plans to fuel its expensive & ambitious expansion plans by raising substantial capital
- The emerging e-commerce firm aims to raise USD 1.5 billion from Wall Street
- Pinduoduo’s shares plunged by over 6% after the declaration
Chinese start-up Pinduoduo, a promising rival of e-commerce mammoth Alibaba, has reportedly made plans to raise around USD 1.5 Bn (S$2 Bn) from Wall Street to invest in its expensive expansion move.
The Shanghai-based firm, which has expertise in selling very low-priced merchandise, stated in a share market filing on Tuesday that it has an aim of issuing about 37 Mn new shares while stakeholders sell around 14.8 Mn.
For the record, Pinduoduo was founded in the year 2015 by Colin Huang, an ex-Google employee. Sources claim that Pinduoduo had a stunning start and successfully reserved a spot between Alibaba and JD.com, the two superpowers of China’s e-commerce market.
According to authentic sources, Pinduoduo’s shares plunged by over 6% after the declaration was made.
Pinduoduo, which at September end had about 385.5 Mn active users, doubled the count in just one year and claimed about US$50 Bn in yearly transactions on the platform, cite trusted sources. At its present Nasdaq share price of approximately US$29, the investment deal could empower the group to raise around US$1.5 Bn, suggest reports.
According to market experts, Pinduoduo’s success strategy relies heavily on allowing buyers to participate in group purchases of daily-use consumer goods, including food, socks, kitchen utensils, and other similar stuff, thereby offering ultimately low purchase prices.
Undoubtedly, the niche of ultimately low prices has bolstered its popularity across the working populace and rural locales, state sources close to the firm.
As per Pinduoduo’s statement, the newly raised funds would be utilized for expanding and enhancing its business operations including potential strategic acquisitions and investments.
Reportedly, in 2018’s third quarter, the firm had a turnover of US$491 Mn but it struggled to make a profit, witnessing a loss of US$160 Mn in the same duration.