REUTERS/Mike Segar
Chinese Internet names continued their IPO hot streak on Thursday, after shopping app Pinduoduo Inc. made its public debut.
Shares of Pinduoduo PDD, +40.53% rose 40% in their first day of trading and were up another 4% premarket Friday. The company raised $1.6 billion through its initial public offering, during the second-busiest week for IPOs this year.
Pinduoduo operates an app that allows people to group together on WeChat and arrange to order products at discounted prices. The company has been likened to a combination of Groupon Inc. and Facebook Inc., since people both get deals and then share their purchases, but Pinduoduo calls itself a mash-up of Costco Corp. and Disneyland in its IPO prospectus.
Denis Barrier, CEO of venture capital firm Cathay Innovation, said that one interesting element of Pinduoduo’s story is that the company has been successful in lower-tier Chinese cities. His company was an early-stage investor in Pinduoduo and still has a position.
The company, which had 195 million monthly active users on average in the March quarter, isn’t profitable. Pinduoduo is the subject of a complaint filed by a diaper manufacturer arguing that the company allows counterfeit products to be sold on its platform, according to the New York Times. Other Chinese e-commerce companies have faced similar charges.
Fellow Chinese internet companies have also seen success in the U.S. IPO market this year. They include iQiyi Inc. IQ, -1.49% a streaming company that spun out of Baidu Corp. BIDU, -0.97% and Huya Inc. HUYA, -1.96% a game-streaming platform. Both are trading significantly above their IPO prices.