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Why Pinduoduo Stock Popped Today

By Joe Tenebruso - Updated Apr 1, 2021 at 5:53PM

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A respected investment manager appears to be bullish on the Chinese e-commerce star.

What happened

Shares of Pinduoduo (PDD -8.63%) jumped 7.5% on Thursday following news that popular fund manager Cathie Wood purchased the stock for her ARK Fintech Innovation ETF (ARKF -7.56%)

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.

A person is pushing a keyboard button labeled buy.

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 -5.46%) 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.

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Stocks Mentioned

Pinduoduo Stock Quote
Pinduoduo
PDD
$36.96 (-8.63%) $-3.49
Alibaba Group Holding Limited Stock Quote
Alibaba Group Holding Limited
BABA
$82.47 (-5.46%) $-4.76
ARK ETF Trust - ARK Fintech Innovation ETF Stock Quote
ARK ETF Trust - ARK Fintech Innovation ETF
ARKF
$16.75 (-7.56%) $-1.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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