[其他] Tencent-backed Pinduoduo accused of inflating revenues [推广有奖]

Pinduoduo, the Tencent-backed ecommerce company that reached a peak valuation of $33bn after listing in July this year, has been accused of inflating revenues and falsely trimming losses in a scathing attack by the Texas-based activist fund Blue Orca.

Shanghai-based Pinduoduo is one of 30-odd Chinese tech companies that headed to the public markets this year. A wave of enthusiasm for the sector boosted valuations but a subsequent souring means that virtually all are now below their listing prices.

Shares in Pinduoduo, which were priced at $19 in its US initial public offering, closed on Wednesday slightly above that level. In a 42-page report, Blue Orca alleged Pinduoduo, founded by ex-Google engineer Colin Huang, made net losses last year that were 65 per cent greater than the amount disclosed to US investors.

“PDD notes the Blue Orca report which contains a series of incorrect suppositions,” said the company. “PDD is announcing its quarterly results on Tuesday 20th November and we will address the issues raised at that time.”

Blue Orca is a short-seller that notes in its report that “we will make money if the price of PDD stock declines”.

“I have heard Pinduoduo was cooking its numbers before they were listed,” said one Hong Kong-based analyst at a bank. “I find this claim to be incredible, as you’ve got Tencent, Sequoia, and some of the world’s best minds looking at it, so I’m sure they’ve conducted due diligence for rudimentary stuff, such as revenue recognition.”

The group’s shares rose 11.7 per cent in Nasdaq trading on Wednesday.

The company has been hit by a probe and a lawsuit in recent months.

In August, China’s market regulator announced an investigation into reports of counterfeit goods sold on the site. The same month diaper brand Daddy’s Choice alleged in a court filing in New York that products sold on the site infringed its intellectual property.

A class-action lawsuit filed in New York accused the group’s listing prospectus of containing false and misleading statements, including a failure to stop merchants selling fake goods.

Blue Orca, whose probe into Samsonite earlier this year ousted the chief executive of the luggage maker, alleged discrepancies between Pinduoduo’s regulatory filings in the US and China.

Numbers reported to China’s State Administration for Industry and Commerce often conflict with US regulatory filings, partly — say analysts — due to company efforts to downplay earnings for tax reasons.

However, SAIC filings have also been used to shine a light on inflated numbers — of everything from earnings to staff to factories — at US-listed Chinese companies that have subsequently seen their share prices tumble.

Blue Orca also alleges the ecommerce company used an undisclosed company related to the chairman to hire staff — and that its headcount, as stated on the website, is 4.3 times that stated in its filings to the Securities Exchange Commission.

Blue Orca said Pinduoduo generated far more gross merchandise volume — the value of goods sold through the site — than its peers, including Alibaba and JD.com.

However, using the headcount disclosed on Pinduoduo’s website — instead of its SEC filings — puts its GMV-per-employee in line with the industry average, it says.

Additional reporting by Emma Dunkley in Hong Kong