(Reuters) – Shanghai-based e-commerce giant Pinduoduo reported quarterly revenue above Wall Street estimates on Monday, buoyed by a major shopping fest and price promotions to attract growing Chinese consumers reluctant to open their wallets.
The group’s US-listed shares rose more than 15% in trading before the bell.
“We saw a recovery in consumer confidence in the second quarter, especially during the 618 shopping festival,” said general manager Chen Lei.
He cited agricultural products, fast-moving consumer goods, consumer electronics and beauty products as top sellers, and said the promotions also boosted sales.
As a regulatory crackdown has ensnared tech giants across China in recent years, Pinduoduo has strongly promoted its role of connecting farmers to consumers, waiving sales commission to merchants selling agricultural products.
On a post-earnings call with analysts, Chen said a similar program will be rolled out for artisans in the near future.
Pinduoduo, founded in 2015, first gained traction with consumers in small towns in China, but has since expanded its reach to tier-one cities.
China-wide fiscal constraints have become more apparent amid an economic slowdown and record youth unemployment.
According to China’s National Bureau of Statistics (NBS), retail sales in July rose 2.7% year-on-year, below the expected growth of 5% and the 3.1% rate seen in June.
The platform is now eyeing international expansion, with a cross-border e-commerce platform slated to launch in the coming months, targeting the United States as its first market.
“Overseas business is one of the opportunities we see…(we) see many peers in the industry doing well, so we think it’s a direction worth trying. “, CEO Chen said.
Pinduoduo could benefit from an agreement reached between Beijing and Washington last Friday to allow U.S. regulators to vet accounting firms in China and Hong Kong, potentially ending a dispute that threatened to drive Chinese companies off U.S. stock exchanges.
Peers JD.com and Alibaba will also potentially benefit from this deal. Both also exceeded expectations with quarterly results announced earlier this month.
Pinduoduo’s total revenue was 31.44 billion yuan ($4.55 billion) in the quarter ended June 30, against an estimate of 23.68 billion yuan, data shows. from Refinitiv.
Pinduoduo’s net profit attributable to common shareholders was 8.9 billion yuan in the quarter, up from 2.41 billion yuan a year earlier.