Chinese e-commerce giant Pinduoduo accused of inflating revenues
Chinese e-commerce business Pinduoduo has been accused by a US investment firm of overstating its revenues and understating its losses and staffing costs.
Investment business Blue Orca published a report on Wednesday which accused the Chinese business of publishing false information about its financial performance.
Pinduoduo was founded by former Google engineer Colin Huang in 2015. The app is only available in China and allows people to pay reduced prices for items if they encourage their friends and relatives to also purchase the same goods.
Blue Orca’s report alleged that Pinduoduo filings in China and the US gave different information about the business’ finances. Pinduoduo is listed in New York and provides information to the US Securities and Exchange Commission, as well as to the Chinese government.
The reported alleged that filings with the Chinese government showed that Pinduoduo’s net losses were 65pc greater than the figure disclosed to the SEC.
Blue Orca also accused Pinduoduo of underreporting the number of staff it employed in China and quietly hiring staff to work for Pinduoduo but in the office of another business.
The report’s dramatic claims failed to have a significant effect on Pinduoduo’s shares, however. The business’ share price was 2.8pc down in pre-market trading on Thursday.
A spokesman for Pinduoduo said “Pinduoduo notes the Blue Orca report which contains a series of incorrect suppositions. Pinduoduo is announcing its quarterly results on Tuesday 20th November and we will address the issues raised at that time.”
Pinduoduo went public in New York earlier this year and now has a market cap of $19bn (£14.8bn). Investors include Chinese internet giant Tencent, which uses its Wechat messaging app to promote items listed on the Pinduoduo marketplace.
Blue Orca is a US-headquartered activist investor which investigates businesses which it takes short positions in. Earlier this year, it forced the chief executive of luggage manufacturer Samsonite to resign after it claimed that he had falsified parts of his CV.
