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Meituan’s Loss Warning Spurs $27 Billion China Internet Rout

(Bloomberg) -- Meituan’s shares dropped its most since April after warning of losses this quarter from a price-based battle with Alibaba Group Holding Ltd. and JD.com Inc., wiping out a combined $27 billion in market value from the three internet commerce leaders.

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China’s food delivery leader issued its dire prediction after reporting “irrational competition” eradicated most of its profit in the June quarter. That spooked investors already nervous about deepening losses in the online arena, prompting a series of downgrades on Meituan. Shares in Alibaba and JD both slid about 5%, while Meituan was down 13% at one point. The Hang Seng Tech Index led losses in Asia on Thursday, slumping as much as 2.3%.

The plunge in profitability illustrates how Meituan is facing its greatest challenge in years from twin rivals that — till recently — had largely ceded the domestic meal sector. That changed in 2025 when JD.com, pursuing growth during a consumption downturn, and Alibaba’s Ele.me began offering generous subsidies to cash-strapped diners.

Meituan Shares Slump After Warning Major Losses: Street Wrap

The Beijing-based company now expects “significant losses” for its core local commerce business including food delivery in the current quarter, Chief Financial Officer Chen Shaohui told analysts on a post-earnings call on Wednesday.

“We expect there will be continued fierce competition in the near term,” Chen said. “That will bring negative impact on our financial results.”

Read: JD.com Billionaire’s Stunt Reignites China’s Food-Delivery Feud

The three-way battle in the food arena eroded profitability across the sector and forced Meituan to defend its core business on multiple fronts. This month, JD.com reported a halving in net income for the quarter. Alibaba has posted muted growth and is set to report earnings on Friday.

In past months, the trio has invested billions of dollars on incentives and hiring delivery riders. This strategy backfired with investors, who sold off shares in Meituan and JD.com, erasing roughly $100 billion of their combined market value at one point.

Following a warning from industry regulators, the three corporations in August pledged to cease their “disorderly competition” and avoid a self-destructive price war.

What Bloomberg Intelligence Says

Meituan’s core local commerce margin collapse to 5.7% in 2Q, well below the near-19% average of the past four years, heightens the risk that a lower “new normal” profitability is inevitable for the firm as competition from Alibaba and JD.com erodes its dominance in China’s food and on-demand delivery market. Even if promotion and user incentives recede, which had earlier surged 49% year over year in 1H and outpaced revenue growth of 15% during that time, Meituan will likely need to spend more on logistics to support non-food deliveries. Logistics costs jumped to 39% of sales in 1H vs. 37% a year earlier.

- Catherine Lim, analyst

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Faced with margin pressure at home, Meituan is looking overseas. Its own aggressive pricing strategy forced Deliveroo Plc to retreat from Hong Kong after a decade of operating in the city.

Meituan’s food delivery app Keeta has rolled out service to Saudi Arabia’s major cities since entering the market in 2024, and launched in Qatar last week. And it plans to spend $1 billion over five years to take its service to Brazil.

But that expansion is also taxing its coffers. Meituan reported a 27% rise in cost of revenues during the quarter, which it partly blamed on that overseas exploration.

--With assistance from Vlad Savov.