Pinoduoduo Erupts as Shoppers Hunt Discounts

The market belongs to discounters worldwide 

BREAKING NEWS

The massive Chinese e-commerce player Pinoduoduo is erupting this morning after an incredible earnings beat. The discount-heavy player has become a dominant force in a weaker Chinese economy. 

WHAT HAPPENED

At a moment when investors basically expected nothing but bad news from Chinese companies, PDD just blew the door off of their earnings expectations. The e-commerce company generated a staggering $1.64 EPS from $9.7 billion in quarterly revenue. That's a double-digit beat on both sides of the ball as consumers flooded PDD's discount-heavy sites with demand. Pinoduoduo is known as a discount shop in China and the company also owns the more globally recognized  Temu brand, and it looks like the low-cost alternatives these stores offer are finally gaining a lot of ground. 

PRICE SENSITIVE

This earnings beat represents a near doubling of PDD's revenue compared to this time last year while their margins have improved 35%. In a moment where investors assume global demand is essentially dead, discount shops are showing that consumer demand is basically shifting to wallet-friendlier options. 

WHY IT MATTERS

This is a great initial sign for the wider recovery within China. It also continues to hurt Alibaba as that company suffers from slowing sales and a botched bid to spin their cloud division. In a consumer spending slowdown, discounts are the new king. PDD stock soared over 15% as markets opened.