What happened
Shares of Pinduoduo (PDD 0.24%) jumped 7.5% on Thursday following news that popular fund manager Cathie Wood purchased the stock for her ARK Fintech Innovation ETF (ARKF -0.26%).
So what
After her funds' stellar performance in 2020, Wood has become one of the most widely followed investment managers. Her buys and sells can move stock prices, as other investors mimic her trades. This appeared to be the case with Pinduoduo today.
Image source: Getty Images.
Wood reportedly bought 57,877 shares of the fast-growing Chinese e-commerce company on Wednesday. Many investors seemingly thought that was a smart move and decided to buy alongside Wood on Thursday, driving up Pinduoduo's stock price in the process.
Now what
It's easy to see why Wood is fond of Pinduoduo. It recently surpassed online retail titan Alibaba Group Holding (BABA 0.09%) to become China's largest e-commerce platform by number of active buyers. For context, Pinduoduo's over 788 million customers are more than twice the entire U.S. population.
Yet despite its massive user base, Pinduoduo has a long runway for growth ahead. China's retail e-commerce sales will exceed $3.5 trillion by 2024, up from $2.3 trillion in 2020, according to eMarketer. With $256 billion in gross merchandise volume -- essentially, the total dollar amount of items sold on its marketplace -- Pinduoduo has plenty of room to expand within this enormous and rapidly growing market.
