Hexun Investment Advisor Guo Xuguang: The Cash King of Internet E-commerce Companies Revealed

Pinduoduo disclosed in its just-released 2025 Q4 and full-year financial reports that, as of December 31, 2025, its cash reserves had reached 422.3 billion yuan. Pinduoduo is an internet e-commerce company—how did it manage to accumulate such a huge amount of cash?

First, it can really make money—especially a lot of money. Pinduoduo turned to positive net profit starting in 2021. That year, its net profit was already over 10 billion yuan. After that, year after year it was still in the range of 40–20k yuan of net profit. In 2024 and 2025, it even reached the scale of one trillion yuan in net profit. Since the company was founded and later listed, it has never paid dividends. All these profits sit on its accounts, continuing to generate returns. Therefore, Pinduoduo did not rely on financing to accumulate this money—it was earned, hands-down, through its core business. Although in 2025, due to increased investment, its net profit declined year over year, the full-year non-GAAP net profit still remained as high as 107.3 billion yuan. So when people say it declined, it’s because in 2024 its net profit exceeded 120 billion yuan. In other words, it truly makes an extraordinary amount of money. Not only does it earn, it also has very strong cash conversion. Just in 2025 alone, the net cash flow generated from operating activities was 106.9 billion yuan. So what is all that talk about “billion-yuan subsidies”? It really isn’t just shouting—it’s “the more you make, the more you subsidize; the more you subsidize, the more you make.” For several consecutive years, net cash inflows of over 100 billion yuan every year are the core part of that 422.3 billion yuan cash reserve.

Second, Pinduoduo shows extreme restraint in its strategy—it resolutely does not waste money. When Alibaba and JD.com are building their own logistics, warehousing, doing cloud computing and building infrastructure, and doing big investments in big entertainment and offline physical stores—things like Hema and RT-Mart—while losing hundreds of billions in their food delivery business, Pinduoduo has always insisted on doing just one thing: selling goods. It outsources heavy infrastructure like logistics to third-party partners such as SanTongYiDa and YTO Express. In other words, its light-asset platform model means that without those massive capital expenditures, profits have stayed very strong.

Third, it’s about operational efficiency. We know that large internet companies often, as their business expands, begin competing internally for power and influence—grabbing territory. Tasks that 10 people in one department could complete would force them to hire 20 people, leading to bloated organizations. But Pinduoduo has always maintained an extremely lean team size. The number of employees supporting more than 60k yuan in annual revenue and more than a hundred billion yuan in net profit is only about 20k people. Compared with Alibaba and JD.com, that’s smaller by about 1 to 2 orders of magnitude. So Pinduoduo’s profit per employee is extremely high. Calculated, Pinduoduo’s net profit per employee in 2025 is as high as 4 million to 5 million yuan. And because its labor and daily administrative management costs are very low, when the revenue scale explodes, these marginal costs hardly increase. This is what makes its profit margins far exceed those of peers.

Fourth, this is the natural advantage of platform-model e-commerce: it gives it ample payment terms. Why do many companies want to turn themselves into platforms? One of the most important financial considerations is to use other people’s money to earn payment-term “float.” Like all super e-commerce platforms, Pinduoduo is also a master at making money with other people’s funds. When we consumers buy on Pinduoduo, the cash we pay goes into the platform immediately. But the settlement between the platform and the merchants is not like that. Generally, there is a payment term ranging from a few days to several dozen days, or even longer. These payment terms mean: the higher the total transaction value of goods the platform sells, the more funds I can hold and settle with over time. This includes accounts payable to merchants, as well as the deposits merchants pay. This kind of normalized “funds held” is also an important component of Pinduoduo’s cash reserves. Not only that—this money also generates interest continuously. Based on estimates, Pinduoduo’s 2025 GMV is about 6 trillion yuan. Then, according to a 30-day payment term, that means that on average, 500 billion yuan in payment-term funds generates financial interest for Pinduoduo throughout the year. If we calculate using an annualized rate of 2%, that easily comes to 10 billion yuan per year. You see, doesn’t the “billion-yuan subsidy” come from this? So the core secret behind Pinduoduo accumulating those 422.3 billion yuan is: earning extremely high profits from the main business with very high gross margins. Second, the operating model is extremely frugal—no chaos in spending, light assets, fewer employees, plus the platform’s own capital-deposit effect. So with all this money Pinduoduo has, it doesn’t invest in any hot tracks, nor does it do loan business—it focuses on the one business of selling goods. So Pinduoduo’s strategic focus is truly very strong. At the earnings call, Pinduoduo’s co-CEOs Zhao Jiazhen proposed “Yegge New Pinduoduo” as the core vehicle to rebuild another Pinduoduo in three years. This project is already being implemented in Shanghai. The first round involves an initial cash injection of 15 billion yuan. In the future three years, the plan is to invest 100 billion yuan. Shanghai’s private enterprise “cash king” is about to start spending money. Are you ready?

(Editor: Zhang Yang HN080)

     【Disclaimer】This article only represents the author’s personal views and is not related to Hexun. Hexun does not provide any express or implied guarantee regarding the accuracy, reliability, or completeness of the statements, viewpoints, or judgments contained in the article. Readers should treat this content as for reference only and bear all responsibility themselves. Email: news_center@staff.hexun.com

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