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Why Pinduoduo Stock Popped Today

By Jeremy Bowman - Updated Jul 2, 2020 at 5:05PM

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Shares of the company gained along with other Chinese stocks.

What happened

Shares of Pinduoduo (PDD 4.99%) were climbing to all-time highs today on a broader wave of gains among Chinese tech stocks. Though there was no clear reason for its gains, the stock finished Thursday up 8.8%.

So what

Today's gains came alongside a number of Chinese e-commerce stocks moving higher, including Baozun and Alibaba. A strong June manufacturing report on Wednesday may have helped lift Chinese stocks. They may also have benefited from better-than-expected second-quarter vehicle deliveries from Tesla, which seemed to show strong demand from the Chinese market, a sign that the country's economy is bouncing back from the pandemic and that Chinese consumers are eager to spend.

A man delivering a package.

Image source: Getty Images.

Pinduoduo said Wednesday morning that its founder and CEO, Colin Huang, would step down in a surprise move (he is only 40). Huang will stay on as board chairman while Lei Chen, the current chief technology officer, will serve as the next CEO.

Huang said: "Lei Chen has been instrumental to Pinduoduo's growth since inception. With him taking on the role of CEO, I have every confidence that Pinduoduo will be able to take on more responsibility to create value for society."

Investors had little reaction to the news when it came out Wednesday, although it could raise some suspicions. But Huang said that while he will be stepping back from the day-to-day management of the company, he will be focused on fundamental research and long-term strategy.

Now what

Chinese stocks may also be climbing today as U.S. investors look for options outside of American stocks as signs emerge that the U.S. economic recovery is stalling and coronavirus cases are surging again.

For growth investors, it's easy to see the appeal of Pinduoduo. The company's social commerce model has caught fire as revenue jumped 130% to $4.33 billion, though the company is still unprofitable. Investors currently seem to be hungry for high-growth tech stocks that can withstand the pandemic, and Pinduoduo fits the bill.

Jeremy Bowman owns shares of Baozun. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Baozun, and Tesla. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Pinduoduo Stock Quote
$49.62 (4.99%) $2.36
Tesla, Inc. Stock Quote
Tesla, Inc.
$859.89 (-2.62%) $-23.18
Alibaba Group Holding Limited Stock Quote
Alibaba Group Holding Limited
$94.87 (2.64%) $2.44
Baozun Stock Quote
$9.14 (5.42%) $0.47

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