Pinduoduo (PDD  ) shares were trading nearly 30% higher following the company's better than expected Q3 earnings report which showed a beat on the top and bottom lines. Pinduoduo has a unique business model in that it allows for 'group buying' which led to virality and quick growth. It actually started as a way for farmers to sell produce directly to customers.

This resulted in Pinduoduo becoming one of the hottest stocks in the market following its IPO in the summer of 2018. It opened around $20 and eventually reached nearly $220 in 2020, prior to the CCP's crackdown on tech companies which caused the entire sector to deflate. The stock ultimately dropped 89%, retracing the entirety of its gains, before bottoming in March of this year.

Now, it's been enjoying a nice rally as it's more than tripled from these lows. Further, the newsflow is also much more supportive as the CCP is now focused on boosting the economy, eased tensions with the U.S., backed off on harsh regulations, and seems intent on reopening the economy. All of these were headwinds and have now become tailwinds.

Inside the Numbers

In Q4, Pinduoduo reported earnings per share of $1.21 which was well above analysts' estimates of $0.65 per share in earnings. Revenue also easily outpaced expectations at $5 billion vs $4.3 billion.

Another highlight from the report was that revenue from transaction services increased by 102% to nearly $1 billion. This is one of the upside opportunities for Pinduoduo - provide higher margin and higher value services to the sellers on the company's platform, similar to Shopify (SHOP  ).

In a statement accompanying the release, CEO Lei Chen said, the company will "continue to step up our investment in R&D and create long-term value through innovations." The company didn't issue any guidance for the full year or upcoming quarter, but management struck an optimistic tone when it came to the COVID situation and other uncertainties.

What's less certain is that Pinduoduo continues to showcase impressive performance during one of the most challenging times for businesses in China. Therefore, it's hard to not be optimistic about its future given that the macro environment is bound to improve in the coming months.