Shares plunged more than 13% intraday; Pinduoduo’s performance continues to suffer.
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On May 27, after Pinduoduo released its financial report for the first quarter of 2026, Pinduoduo’s shares on the US stock market fell by more than 13% at one point after the opening.
The intense reaction of the capital market reflects concerns about Pinduoduo's slowing growth, pressured profits, and a lengthening cycle of future investments.
The financial report shows that Pinduoduo achieved revenue of 106.2 billion yuan in the first quarter, an increase of 11% year-on-year, but this was lower than the market expectation of 108.6 billion; net profit attributable to shareholders was 12.5 billion yuan, a year-on-year decrease of 15%; Non-GAAP net profit was 14.1 billion yuan, a year-on-year decrease of 17%, far lower than the market expectation of 24.6 billion.
Meanwhile, Pinduoduo’s revenue from transaction services reached 56.3 billion yuan, up 20% year-on-year, and its proportion of total revenue rose to 53%, surpassing online marketing services and other income to become Pinduoduo’s largest source of revenue.
In the first quarter, Pinduoduo’s online marketing services and other income reached 49.9 billion yuan, compared to 48.7 billion yuan in the same period of 2025, an increase of only about 2% year-on-year.
Clearly, growth in advertising business is slowing, directly dragging down overall revenue performance.
The decline in profits is related to Pinduoduo’s increased investments.
The financial report shows that Pinduoduo’s total cost of revenue in the first quarter was 46.9 billion yuan, up 15% year-on-year, a growth rate higher than overall revenue.
Pinduoduo stated that the increase was mainly due to higher fulfillment fees, bandwidth and server costs, as well as increased payment processing fees.
Meanwhile, the company’s R&D expenses reached 4.4 billion yuan, up about 22% year-on-year.
For the direction of future investments, management also gave clear signals during the earnings call.
Pinduoduo’s Co-Chairman and Co-CEO Chen Lei said: "This quarter marks the beginning of a deep transformation of our business, internal processes, and organizational structure."
Another Co-Chairman and Co-CEO Zhao Jiazhen stated, “Over the next ten years, supply chain investment will be our core strategic focus,” and the company will “devote substantial resources to building private label businesses, creating new opportunities for supply chain partners.”
In recent years, Pinduoduo's management has made supply chain building its strategic priority for the future, and at the end of March 2026 announced the establishment of Xin Pinmu, integrating Pinduoduo’s main site and TEMU supply chain resources to explore a global self-operated model.
Xin Pinmu is a costly project, with cash injections of 15 billion yuan in its first phase, and over the next three years, Pinduoduo plans to invest a total of up to 100 billion yuan.
Clearly, Pinduoduo is entering a new cycle of investment, which also means that short-term profit margins may remain under pressure.
Judging from the current market reaction, the question investors are most concerned about is not whether Pinduoduo has “growth,” but whether it is entering a stage where “revenue grows but profits do not.”
Especially after Pinduoduo clearly stated its focus on supply chain investment over the next decade, the market has begun to reassess the company’s profit model.
For the capital market, the Pinduoduo that used to rely on rapid expansion driven by high growth and high profit margins is now entering a new stage focused more on investments and operations. This is also a major reason for weakened market sentiment after this earnings report.
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