PDD Stock Price: $197 Target By China Renaissance

By Amit Chowdhry ● November 17, 2020
  • Shares of Pinduoduo Inc (NASDAQ: PDD) have received a price target of $197 by China Renaissance Securities. These are the details.

Shares of Pinduoduo Inc (NASDAQ: PDD) have received a price target of $197 by China Renaissance Securities. China Renaissance analyst Charlie Chen also upgraded Pinduoduo to “Buy” from “Hold.” Chen cited an “exciting” quarter.

Chen pointed out that the third-quarter results should also alleviate concerns around speculation that Pinduoduo may not be able to sustain high GMV growth with lower sales and marketing spending.

In an interview with CNBC, a senior executive at Pinduoduo said that the company is on track this year to double online grocery sales compared to last year. Pinduoduo VP David Liu pointed out that the coronavirus pandemic has changed the way that people buy groceries, which has been generating demand for the company.

“There is a change in terms of how people want to satisfy their daily grocery needs, and they want more selection,” said Liu in an interview with CNBC’s Arjun Kharpal. “People are also looking for an alternative to the traditional wet markets and supermarkets that they normally have access to.”

Last year, Pinduoduo sold 136.4 billion yuan ($19.3 billion) of fresh produce on the platform. And Liu pointed out that the company is close to doubling that this year. Earlier this year, the company launched Duo Duo Maicai — which sells fresh produce. And through Duo Duo Maicai, consumers are able to pre-order groceries online and pick them up at local outlets.

Currently, Pinduoduo leases warehouses and partners with external delivery companies for handling logistics issues. But going forward, Pinduoduo is planning to invest in its logistics infrastructure to expand Duo Duo Maicai across more provinces in China.

Plans To Raise $5.6 Billion

Pinduoduo recently announced it is planning to raise up to $5.6 billion. With the proceeds, the company is planning to invest in its one-day delivery service of groceries.

The company is planning to sell 25.3 million American depositary receipts — which should generate about $3.6 billion. And the company is also planning to raise up to $2 billion in the form of a convertible bond offering, according to the Financial Times.

Currently, Pinduoduo has about 731 million annual users. The company has not turned a profit yet. Last week, the company reported a net loss of $115.6 million for the third quarter.

Disclosure: I have small PDD position in my stock portfolio.