Pinduoduo's (NASDAQ:PDD) stock quadrupled this year as the Chinese e-commerce company dazzled investors with its robust revenue growth. Its revenue rose 130% last year, then grew another 70% year-over-year in the first nine months of 2020.

However, Pinduoduo remains unprofitable, it faces stiff competition from its bigger rivals Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD), and its stock isn't cheap. Those concerns are all valid, but three catalysts could still boost the e-commerce underdog's stock to fresh highs next year.

A grocery cart with an e-commerce site running on a laptop in the background.

Image source: Getty Images.

1. Alibaba's antitrust woes

Alibaba controlled 55.9% of China's e-commerce market last year, according to eMarketer. JD ranked second with a 16.7% share, followed by Pinduoduo with a 7.3% share. Pinduoduo carved out that niche by encouraging shoppers to team up and make bulk purchases.

Over the past three years, Pinduoduo, JD, and other online marketplaces repeatedly complained about Alibaba, alleging the e-commerce leader locked merchants into exclusive deals. Merchants on Alibaba's Tmall that cross-listed their products on other marketplaces were reportedly penalized with demoted listings and outright bans.

At the beginning of January, China's antitrust regulators started drafting amendments to target those practices. In December, those regulators fined Alibaba for an unapproved acquisition and launched an antitrust probe into its exclusive deals with online merchants.

That probe could force Alibaba to allow its merchants to sell their products on Pinduoduo and other platforms. Pinduoduo could recapture some of those merchants, and that stabilization could reduce its dependence on promotions and shipping subsidies to lock in shoppers.

2. The growth of its agricultural business

Pinduoduo became China's largest online platform for agricultural products this year by allowing farms to directly sell their produce to customers. Group purchases of fruits and vegetables significantly reduce the average cost per unit for cost-conscious consumers, while farmers generate higher profits by cutting supermarkets out of the loop.

Pinduoduo sold 136.4 billion yuan ($19.3 billion) in fresh produce last year, or about 14% of its total gross merchandise volume (GMV), and it plans to nearly double that figure this year.

Pinduoduo plans to leverage that growth to expand its new app, Duo Duo Maicai ("More Grocery Shopping"), which launched back in August. The app lets shoppers per-order groceries online, then pick them up from local stores the next day or wait for door-to-door deliveries within three to five days.

Maicai could help Pinduoduo's shoppers acquire harder-to-ship products like eggs and leafy vegetables, buy what they need instead of teaming up for bulk purchases of single items, and shore up Pinduoduo's defenses against Alibaba and JD's online grocery efforts. It could also fill the gaps in its fragmented logistics network of leased warehouses and third-party couriers.

Maicai isn't generating any meaningful revenue on its own yet, but it could complement the company's booming agricultural business while tethering more shoppers and local stores to its ecosystem.

3. Its ongoing expansion into higher-tier cities

Pinduoduo's group purchase model initially blindsided Alibaba and JD by capturing shoppers in China's lower-tier cities. But over the past year, Alibaba and JD both launched similar discount marketplaces to regain those lower-income shoppers.

That counterattack could curb Pinduoduo's near-term growth, but it's also encouraging it to expand more aggressively into higher-tier cities like Beijing and Shanghai. It's also attracting higher-end brands by subsidizing their platform-exclusive discounts.

That expansion, along with the broader growth of its marketplace, more than doubled Pinduoduo's average annual spending per active user from 894 yuan ($137) to 1,993 yuan ($305) between the third quarters of 2018 and 2020. If that figure keeps climbing in 2021, it could help Pinduoduo shake off its reputation as a low-end marketplace, reduce its dependence on aggressive promotional strategies, and boost its gross margins.

But is Pinduoduo still worth buying?

Analysts expect Pinduoduo's revenue to rise 84% this year and 55% next year. They expect its non-GAAP net loss to narrow this year, and possibly rise to a full-year profit next year. Based on those estimates, Pinduoduo doesn't look that expensive at 15 times next year's sales. Therefore, the three aforementioned catalysts could lift Pinduoduo's stock to fresh highs in 2021 -- especially since many other e-commerce companies are generating slower growth but still trading at higher price-to-sales ratios.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.