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Nov.21 (NBD) -- Chinese social e-commerce platform Pinduoduo Inc. (NASDAQ:PDD) released Tuesday the earnings report for the third quarter of 2018, with total revenue hitting 3.37 billion yuan (485.2 million U.S. dollars), a year-over-year rise of 697 percent.

The company reported 1.1 billion yuan (158.4 million U.S. dollars) in net loss attributable to ordinary shareholders in the June-September period, compared to 221.4 million yuan (31.9 million U.S. dollars) in the same quarter of 2017.

But it generated 344.8 billion (49.6 billion U.S. dollars) of gross merchandise volume (GMV) in the twelve-month period ended September 30, 2018, increasing 386 percent year on year, and the number of active buyers in the period climbed by 144 percent to 385.5 million.

In the third quarter, the monthly active users (MAUs) numbered 231.7 million, up from 71.1 million last year.

According to big data provider Jiguang, Pinduoduo's MAU number first surpassed the metric of JD.com in October, standing at 265 million 249 million, respectively.

Colin Huang, CEO of Pinduoduo, attributed the strong results to the platform's unique shopping experience as well as inexpensive and quality products.

The satisfactory performance inspires confidence in the market. Pinduoduo stock soared by 16.63 percent to close at 23.14 U.S. dollars on Tuesday.

A filing from SEC reveals that Hillhouse Capital has sold out shares of Baidu and NetEase, and reduced over 90 percent of its holdings in Alibaba, while it has purchased a stake in Pinduoduo.

Oppenheimer has also bought shares of the e-commerce platform, decreasing holdings in Vipshop, JD.com and eBay in the third quarter.

It is noted that Pinduoduo stock posted a combined rise of 18.83 percent on November 14-15, after short seller Blue Orca disclosed a short call against the Chinese company.

Blue Orca contended that Pinduoduo inflated the reported revenues and understated staffing costs and net loss. It pointed out that stock of the e-commerce firm should be valued at 7.1 U.S. dollars per share.

In response to the report, Pinduoduo made an announcement saying that all numbers in its financial statements are in full compliance with SEC regulations and rules.

Though the short case didn't drive the stock price down, the company still faces a decline in valuation. As of November 20, its market cap dropped to 25.6 billion U.S. dollars, down from the peak of 33 billion U.S. dollars.

A report from CITIC Securities predicted that the revenue growth of Pinduoduo will slow down, reaching 121 percent and 54 percent in 2019 and 2020, respectively. This could be led by the counterfeit goods on Pinduoduo, as well as target customers' migration to other e-commerce platforms after their revenues and brand awareness are improved.

Email: zhanglingxiao@nbd.com.cn