
Pinduoduo's Q3 earnings report: Management self-deprecating? Or did they really miss this wave of national subsidies?

Pinduoduo's financial report fell short of expectations, which is a fact; during the earnings call, the management acknowledged their weaknesses, leading many in the live comment section to think the executives were lamenting. However, they neither proposed solutions nor provided a timeline. The massive investments seem unable to offset the company's current challenges, leaving us momentarily confused: Is this a sincere acknowledgment of mistakes or an arrogant refusal to change?
Of course, it's also possible that the company itself is unclear. In the world of business, there's nothing new under the sun. Pinduoduo's path to low prices is no secret—it involves cross-border sourcing, viral marketing, and real cash subsidies. In short, Pinduoduo's success today is because they aligned with the trends of the times and identified and met the needs of a broader consumer base.
Yet, their path dependency also meant they missed out on the recent wave of national subsidies, causing many long-time Pinduoduo users to realize for the first time that JD.com and Alibaba also offer cheap products, a wide selection, and efficient services. Consumers aren’t fools—seeking bargains is just one aspect of shopping. Even if they’ve grown the most amid the trend of consumption downgrading, it doesn’t mean they’re flawless.
More dangerously, Pinduoduo’s response to years of collective "protests" from merchants has been to "throw subsidies at the problem." In the past third quarter, the "Billion-Yuan Relief" plan—essentially a merchant version of the "Billion-Yuan Subsidy"—was rolled out: if you have complaints about the platform, we’ll give you subsidies. This subsidy-dependent "platform-merchant" ecosystem can only retain those merchants who can’t survive without subsidies, but it’s ineffective for brands that have weathered years of commercial battles.
Recently, everyone has seen Zhong Shanshan’s remarks. Nowadays, it’s rare to see a billionaire of his stature speak so boldly. Whether he’s right or wrong is subjective, but Zhong is essentially a merchant, and his words reflect the sentiments of many merchants at odds with Pinduoduo. If a large number of such merchants are in such opposition to Pinduoduo, the company can forget about competing with other platforms in future rounds of national subsidies.
Surely no one thinks the national subsidies will only happen in Q4 this year, right? And surely no one believes the subsidies will go to unapproved industries, right? If everyone agrees that high-quality development and industrial upgrading are the future, and that continued economic stimulus is necessary, then driving growth through consumption upgrades is a must. This is one of the biggest contradictions with current trends—how should Pinduoduo adapt?
Unfortunately, the financial report and earnings call provided no answers to these questions. Moving forward, as competition in e-commerce intensifies and global trade protectionism potentially rises under a Trump administration, Pinduoduo’s challenges overseas will only multiply. Like many investors who recognize and appreciate Pinduoduo, our concern isn’t just about missing market expectations in a given quarter—it’s about failing to propose solutions after identifying problems.
We hope to see a turnaround in the next earnings call or the one after. $PDD(PDD.US) $JD.com(JD.US) $Alibaba(BABA.US)
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