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Shares in Pinduoduo rose more than one-fifth after the Chinese ecommerce group announced on Tuesday that it would donate $1.5bn in future earnings to charity as it posted its first quarterly profit since its initial public offering three years ago.
Pinduoduo, which pledged to contribute towards the development of agriculture until its donations reached Rmb10bn, became the latest Chinese tech group to make a high-profile foray into philanthropy amid a sweeping regulatory assault on the sector.
Tencent announced last week that it would set aside Rmb50bn for a “common prosperity programme”, a declaration that followed calls by President Xi Jinping to foster “common prosperity” in the face of growing social inequality.
“Agriculture has long been at the core of Pinduoduo’s corporate mission and strategy and the [initiative] we announced today is a way for us to deepen our support for agricultural modernization and rural vitalization,” said Chen Lei, Pinduoduo chair and chief executive.
“Investing in agriculture pays off for everyone because agriculture is the nexus of food security and quality, public health and environmental sustainability,” he added.
Pinduoduo’s American depository receipts rose 22 per cent and closed just shy of $100 but the company cautioned that its first quarterly gain did not point to sustainable future profits.
Analysts were also sceptical that the latest results represented a turning point for the company. Citi lowered its target price for the company’s shares from $168 to $140, while analysts cited expectations of slowing user growth “amid large base and intensified competition”.
Chinese tech stocks have been pounded by a widespread crackdown in recent months, wiping hundreds of billions of dollars off the stock market capitalisation of some of the country’s biggest companies.
Chinese tech shares fell in Hong Kong trading on Wednesday after two days of strong gains. The Hang Seng Tech index, which tracks some of China’s largest offshore-listed tech groups including Alibaba, Tencent and Meituan, edged down 0.1 per cent after rising 2.5 per cent on Monday and gaining more than 7 per cent on Tuesday.
Shares in Alibaba, whose Hong Kong-listed shares were down 2 per cent on Wednesday, have dropped 30 per cent this year, while Tencent stock has fallen about 16 per cent. Shares in Pinduoduo have dropped 44 per cent in 2021.
Shares in New Oriental Education, which has seen its stock drop about 84 per cent this year after Beijing banned the tutoring industry from making profits, saw its shares rise $0.45 on Tuesday, reflecting a gain of more than a quarter in New York trading.
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