domeet webmaster

Author 丨 Exhibition

Editor Yang Xuran

In the evening of May 22, Pinduoduo released its first-quarter financial report. The stock price soared 14.5% on that day, with a total market value of US $ 82.3 billion. On the same day, Alibaba ’s share price disclosed by the financial report fell by 5.87%, and JD.com also fell by 5.08%.

On November 20, 2019, half a year ago, after Pinduoduo released its third quarter 2019 financial report, the stock price plunged 22.89% that day, the biggest drop for its listing.

Based on the low of November 20, 2019, Pinduoduo ’s share price has more than doubled. But half a year, the market’s view of Pinduoduo has changed dramatically.

good and bad data signals

When the stock price plunged last year, Yiou ’s view on Pinduoduo is that even compared with Taobao in the early years, Pinduoduo has a great advantage at the user level, and at the same time, the tens of billions of subsidies make up for the shortcomings of customer unit prices, and then catch up The disadvantage of GMV.

Pinduoduo ’s stock price in the past 1 year Source: wind

What changes have happened to Pinduoduo in the past six months? The quarterly report disclosed both good and bad signals.

Good signals are:

1. The number of active users (MAUs) reached 487 million, a year-on-year increase of 68%

2. Active purchase users (ordered in the past 12 months) reached 628 million, a year-on-year increase of 42%

3. The average annual single customer consumption (ARPU) reached 1842.4 yuan, a year-on-year increase of 47%

4. Single quarter revenue reached 6.541 billion yuan, a year-on-year increase of 44%

Bad signals are:

1. The monetization rate dropped slightly to 2.8%

2. The increase in various costs has led to a substantial increase in losses.Non-GAAP Operating Loss for the quarter reached 3.588 billion, an increase of 121.2% year-on-year.

The data growth of dazzling users, ARPU, GMV and other data has convinced the market that the expanded loss value is basically not worth mentioning in the market occupied by Pinduoduo.

The optimistic investors seem to have forgotten that the Chinese e-commerce market is no longer a rash era in which crowds are competing.

On the same day that Pinduoduo disclosed the Q1 quarterly report, Alibaba rarely disclosed GMV data in the quarterly report. This is the first time Alibaba has actively disclosed the data after 15 quarters. The total GMV (over the past 12 months) exceeds US $ 1 trillion.

Ali used this number to release a strong signal: Ali is still sitting firmly, but it is not limited to Chinese e-commerce.

The stable performance is as follows: Alibaba’s Chinese retail e-commerce GMV (near 12 months) reached 6.59 trillion yuan, compared with Pinduoduo GMV (near 12 months) of 1.16 trillion yuan.

It is not limited to Chinese e-commerce performance: Ali also has a broad overseas market. Among its 960 million active buyers worldwide, AliExpress and Lazada also contributed 180 million overseas users.

Alibaba report for the first quarter of 2020 in near future Source: Alibaba official website

The U.S. stock market is far more effective than the A-share market, with a much higher proportion of institutional investors and stronger pricing power. Under such a premise, why are mature international investment institutions more optimistic about Pinduoduo?

Loss and win strategic decision

On May 24, 2010, the B2C foreign trade e-commerce website Lanting set a trend to acquire a B2C e-commerce aimed at Chinese consumers-Ou Ku Mall. Guo Qili, Chairman of Lanting Jishi, said: “Ouku joined Lanting and let usHave the opportunity to achieve leapfrog development in China’s domestic e-commerce market. “

Ouku.com was founded in July 2007. The majority shareholder is BBK and the founder is Huang Zheng. At the time of the acquisition, Ou Ku’s valuation was 2.167 million US dollars, which was Huang Zheng’s small trial in the e-commerce field.

Subsequently, in April 2015, Huang Zheng set up Good Goods, and IDG gave a valuation of 80 million US dollars on the first day. “In addition to fruit, there are many things that can be spelled around this group of target users. What we want to do is to move Costco abroad to China.” Huang Zheng, the founder of Pinyin Goods, described his future business strategy.

From the beginning, Pinduoduo took Costco as its learning object, and the Costco model is essentially not a retailer in the traditional sense, it is more like a consumer ’s agent, and the membership fee is the consumer ’s Compensation for services paid by agents.

The genes determine that the core of Pinduoduo must be around users and consumers, and users are the main battlefield of Pinduoduo.

In the past two years, Pinduoduo has made great achievements in the main battlefield. It only took 10 quarters to climb from “200 million people are fighting” to “600 million people are fighting”. It took 21 quarters for active consumers to reach 600 million, which was a victory for Pinduoduo.

As of Q1 of 2020, Taobao has 726 million active users, Pinduoduo 628 million, and Jingdong 387 million. In total, the active users of Pinduoduo are only 100 million away from Taobao, but its growth rate is still three times that of Taobao (the active user growth rate of Taobao is 2.1%, Pinduoduo 7.3%, Jingdong 7.0%) In the future of the user side, it still has great imagination.

The main reasons for Pinduoduo ’s success at the user level are two:

The first is the strategy of surrounding the city by the countryside, and the vast space of the sinking market has built the first layer of soil;

Second, based on WeChat’s flow pool, social e-commerce built a second layer of soil.

The future user war of Pinduoduo will also be based on these two layers of soil.

Let ’s take a brief look at the situation of WeChat ecology. According to Tencent ’s 2019 annual report, WeChat ’s monthly activity is 1.165 billion, while Tencent ’s monthly active accounts in the payment field exceed 800 million.

In addition, according to the statistics of Eo think tank, the penetration rate of e-commerce in first- and second-tier cities is about 80% to 85%. Considering the elderly and children, the first- and second-tier markets have basically been fully popularized; in the sinking market, e-commerce penetration in low-tier cities Rate at 55%~ 65%, the rural market penetration rate is about 35%.

At present, the total population of the first and second-tier population is about 300 million, the total population of urban areas in the sinking market is about 600-700 million, and the total population of rural areas is about 400-500 million.

According to this estimate, active e-commerce consumers in first- and second-tier cities are approximately 240 million; active consumers in low- and middle-tier cities in the sinking market are 390 million, rural active consumers are 160 million, and total active users are 780 million.

800 million is almost the ceiling for user growth in Pinduoduo ’s existing model (not internationalized, no new products). According to the current growth rate, Pinduoduo users will peak in the first quarter of 2021, based on user growth The story will no longer be attractive.

In other words, Pinduoduo ’s user growth rate will drop at a rate that is visible to the naked eye in the coming year.

Therefore, starting from the tens of billions of subsidies, Pinduoduo opened the new growth story of GMV.

The driving force behind GMV is the average annual consumption of active users and single users. When the number of active users peaks, in fact, the average annual consumption is what Duoduo is saying, that is, the user’s unit price and purchase Frequent stories.

After the opening of the 10 billion subsidies, Pinduoduo ’s marketing expenditure increased by 3 to 4 billion each quarter, and more than 12 billion marketing expenditures will be added throughout the year, most of which will flow into the platform ’s 10 billion subsidy activities Real and proper “10 billion subsidies”.

From this point of view, it ’s worthwhile to fight a lot, and it ’s worth buying things.

Most of the activities of Pinduoduo ’s tens of billions of subsidies are mostly digital 3C products with higher unit prices, such as smartphones, high-end headphones, and household appliances. This can be regarded as an attempt to increase the unit price of customers.

Attracting users through higher-priced digital 3C products is an important part of Pinduoduo ’s new growth story.

At least on the surface, Pinduoduo is also very rewarding at this point. Based on the latest data disclosed by various companies, the annual GMV growth rate of Pinduoduo is greater than 100%, Taobao is between 30% and 40%, and Jingdong is around 25%.

But we still found a sign of danger: According to the latest data, fight moreThe average annual consumption of single customers is 1,842.40 yuan, which is still 4 times or 2 times away from Taobao ’s 9075.76 yuan and Jingdong ’s 5763.54 yuan.

And the effect of the tens of billions of subsidies is marginally diminishing. In other words, the current effect of the 10 billion subsidies is no longer as good as the effect of the strategy a year ago. The most obvious is the growth rate of the average annual consumption of single customers. Returns two digits, but gradually decreases to 7%.

High and low future valuation

Based on the above analysis of the existing business, our core judgment is: Pinduoduo is more optimistic about the number of users, but the gap between the user base and the real profit is also separated by the mountains of GMV growth and monetization rate. The tens of billions of subsidies and blessings are more and more, and there is no strategy to show the killer level.

This leads to the most direct question: Can you afford a valuation of US $ 80 billion after a continuous rise?

We selected Alibaba, JD and Costco to compare the valuation of Pinduoduo. From a static point of view, Pinduoduo is still at a loss for the time being, so PE valuation method cannot be used for comparison. Only PS and P / GMV commonly used by e-commerce companies can be used for comparison.

From the perspective of PS, since JD.com and Costco mainly count their self-operated goods as revenue, and Pinduoduo is a service fee and advertising model, PS is only comparable to Alibaba. Pinduoduo PS is twice that, and it is only 3 times relative to the valuation of the retail portion of China in the Alibaba system.

From the perspective of P / GMV, Pinduoduo ’s P / GMV is 1.4 times that of Ali (China Retail) and 2 times that of JD.com. Without considering future growth, Pinduoduo is seriously overestimated.

However, we integrated the idea of ​​PEG valuation method and introduced PGMV / G valuation model, which is to use GMV growth rate as another benchmark parameter. We can see that the PGMV / G of Ali and JD.com are both near 1, while Pinduoduo is only 0.5.

Because of the growth rate, this valuation method represents future-oriented ideas and beliefs. From the perspective of facing the future, the valuation of Pinduoduo at this moment is more reasonable.

Ending

In the future, what are the possibilities of Pinduoduo?

More sinking than sinking: Pinduoduo cooperated with the government to sink to lower-tier rural markets (currently cooperating with Foshan, Yantai and other places), Pinduoduo ’s agricultural product e-commerce sales reached 1364 in 2019 It has increased by 109% year-on-year, and has maintained three-digit growth for three consecutive years, which has also made it the largest agricultural product ascending platform in China.

Focus more on offline and online collaboration, user retention and conversion: Pinduoduo shares in Gome and begins to increase the offline and home appliance market; at the same time, the power of live broadcast and “second fight” business continues to seize the mind of 600 million users The tens of billions of subsidies are still going on, and I have tried many attempts to make a better future.

The choice of the market is to believe in the future of Pinduoduo.

Reference:

1. Alibaba ’s quarterly reports for 2015-2020 and 2019 annual reports

2. Pinduoduo 2018-2020 quarterly reports, 2019 annual reports

3. JD.com ’s quarterly reports for 2015-2020 and 2019 annual reports

4. Tencent 2020 first quarter report, 2019 annual report

5. Bain’s “2018 China Shopping Report”

6.i US stocks “Lanting Settlement IPO: US $ 2.167 million acquisition of Ouku Mall in 2010”

7. Pinduoduo “2019 Agricultural Products Upward Development Report”