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Tonight, I believe that all domestic capital, especially Pinduoduo's shareholders, had sleepless nights. Pinduoduo's stock price plummeted 27% in a single day, and its market value evaporated by US$50 billion. The latest market value is only US$142.3 billion, surpassed by Alibaba again.

Regarding Pinduoduo's flash crash,There are three main reasons: first, the performance was not as good as expected;The company's second quarter revenue reached 97.1 billion yuan, an increase of 86% year-on-year. The estimated 99.99 billion yuan was lower than expected. Adjusted operating profit was 34.987 billion yuan, an increase of 139% year-on-year; adjusted net profit attributable to ordinary shareholders was 34.432 billion yuan, an increase of 125% year-on-year.

Of course, if the performance is not as good as expected, there will not be a 30% collapse, especially for a giant Internet company. Therefore, there must be other obvious negative factors behind Pinduoduo's plunge. This negative factor comes from the company's management, just like the management itself shorted its own stock.

The second is that management is shorting itself.Management said that as new challenges come one after another, sacrificing short-term profits is necessary in this process. Management has reached a consensus and is willing to pay a huge current price for long-term health. Profits in the next few quarters may fluctuate and rebound, but the trend of long-term profit reduction is inevitable.

Sacrificing current profits, the profits in the next few quarters will fluctuate, and the long-term profit reduction trend is inevitable. This is definitely the management shorting its own stock. So why does the management short its own stock?

Chen Lei, co-chairman of the company's board of directors, said, "We will invest heavily in the trust and security of the platform, support high-quality merchants, and continuously improve the merchant ecosystem. We are ready to make sacrifices in the short term and may face a decline in profits."

Chen Lei's remarks reminded Jinshi Zatan of an incident about Pinduoduo at the end of July. At that time, Pinduoduo's overseas platform Temu aroused public outrage among merchants. Since July, merchants have come to Temu headquarters to defend their rights. On July 29, it was claimed that 800 warriors had moved into Temu's headquarters building.

The reason behind this is the high fines imposed by TEMU on merchants. In January this year, TEMU adjusted the above five-fold fine to "dividing the fine amount according to the product quality score."

According to an insider, due to the huge fines issued by Temu platform recently, merchants said that the fines were unreasonable and affected their business. According to public community information, many merchants received huge fines from the platform, ranging from tens of thousands to hundreds of thousands, and as many as millions. According to statistics from the merchants who were fined, Temu received billions of yuan just from fines.

The new problem is that not only is the determination of quality points confusing and without specific rules, but TEMU will not provide sellers with evidence information such as physical photos of the goods for these specific return orders, so merchants have no way of knowing where the quality is poor.

This move has caused complaints from Temu merchants. The management's remarks and measures at this earnings conference are likely a response to previous problems. In other words, compared with the previous abuse of fines, Pinduoduo wants to provide merchants with a high-quality platform, strengthen high-quality ecological development, and promote the long-term healthy development of the group.

Management said: 1) Pinduoduo invested 10 billion yuan in resources to increase support for innovative new merchants, significantly reduce merchant fees, and strengthen positive incentives;

2) Pinduoduo has recently introduced the right to refund resource technology service fees and promotion software service fees to merchants. During the activity period when users cancel their orders, merchants no longer have to lose money to gain publicity, nor do they have to face huge fines. Merchants can also enjoy the right to refund service fees.

3) Pinduoduo will also increase its investment in technology. While encouraging high-quality merchants, it will also crack down on illegal and cheating merchants to create a good ecology.

In fact, there is a third point, which is the risk of stampede when institutions form a group.Among Pinduoduo's shares, Huang Zheng is the largest shareholder, holding over 25%; Tencent is the largest single institutional shareholder, holding over 14%. In addition to the two large shareholders, Pinduoduo has also attracted top investors from home and abroad.

During today's plunge, Chen Da, a well-known blogger on Snowball, posted: Hillhouse and Jinglin both shouted at the same time: Oh my god; the reason is that Hillhouse and Jinglin both have large positions in Pinduoduo. However, the second quarter report of 2024 shows that Gaoyi and Jinglin have increased their holdings by a large amount, stabilizing the largest holdings of the two institutions, while Hillhouse has begun to reduce its holdings.

On the other hand, another blogger said that 89% of Xu Xin's positions at Today Capital are in Pinduoduo. Previously, Jinshi Zatan reported that in the third quarter of 2023, Xu Xin entered the secondary market and bought Pinduoduo crazily, with positions directly accounting for 76.3% of his Evergreen Fund.

Jinshi statistics found that Xu Xin held 2.4537 million ADSs at that time, worth $241 million, with a cost per share of $98.07, which once fell below the intraday level. However, Xu Xin sold 100 ADSs in the first quarter, cashing out $116 million, and currently has 5.81 million shares, worth $145 million, so he did not make much money overall.

Looking at Pinduoduo's holdings, Hillhouse Capital reduced its holdings by 11.59 million shares in the first quarter, leaving 35.57 million shares. The largest holdings were not held by Jinglin and Hillhouse Capital, but by American capitals such as BlackRock, Vanguard, Fidelity, and Haina, which all increased their holdings in the second quarter and became big leeks. The most tragic was Sequoia Capital, which increased its holdings by 59.58 million shares in the second quarter, stepping on a landmine...