China's Meituan lost billion in market cap amid rising competition, slowdown in food delivery business

China’s Meituan lost $82 billion in market cap amid rising competition, slowdown in food delivery business

Published

2 years ago

January 10, 2024

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A food delivery courier for Meituan in Beijing, China, on Tuesday, Aug. 22, 2023. A surge in sales expected for Meituan may be a catalyst to its shares, which have outperformed peers as services spending turns out to be a rare bright spot amid deepening investor pessimism. Source: Bloomberg

Bloomberg | Bloomberg | Getty Images

Since the beginning of 2023, Chinese food delivery leader Meituan has lost a staggering $82 billion in market capitalization, as fears over increasing competition and a warning from its management about a slowdown in its main food delivery business have spooked investors.

The tech giant’s market cap has tumbled nearly 60% to 441.06 billion Hong Kong dollars ($56.4 billion) from HK$1.08 trillion ($138.2 billion) at the beginning of 2023, according to LSEG data.

Meituan’s stock has plummeted nearly 85% from its all-time high of HK$460 (about $58.91) hit on Feb. 18, 2021 to HK$70.55 on Jan. 9, LSEG data showed.

The company still dominates China’s food delivery industry, with almost 70% of the market share in the mainland, according to 2022 data from research firm ChinaIRN.

But competition has been rising, especially from Alibaba-owned Ele.me, another prominent food delivery company in China.

“Based on my experience, Ele.me is more aggressive [than Meituan] and have more approaches to giving [discount] coupons,” Feifei Shen, director at The Blueshirt Group and a food delivery user in China told CNBC.

“Usually, I feel I can get cheaper prices for my orders on Ele.me,” said Shen. “Only when I don’t have a coupon, I will think about Meituan.”

Meituan’s share performance

For the quarter ended Sept. 30, Alibaba’s local services segment – which includes food delivery – saw revenue increase by 16%, driven by strong growth in both Ele.me and its mobility business Amap, the tech giant said.

Chinese media reported on Dec. 19 that ByteDance-owned short-video app Douyin was in talks with Alibaba to acquire its Ele.me food delivery business, causing Meituan shares to drop.

Hong Kong-based Blue Lotus Research Institute said the fall in Meituan shares was because of reports that suggested ByteDance could buy Ele.me.

Ele.me and Douyin joined hands in August 2022 to allow the food delivery firm’s merchants to reach users of the short-video app.

ByteDance, which told CNBC in February last year that it was testing a type of food delivery service in China via Douyin, reportedly denied it was in talks with Alibaba to acquire Ele.me.

Meituan shares were also hit after the company warned of a slowdown in its food delivery business in the fourth quarter of 2023, despite reporting positive results in the previous quarter.

Several factors including the macro environment and the warm weather were affecting delivery volumes, CFO Shao Hui Chen said during the company’s third-quarter earnings call.

“On financial outlook, we think Q4 revenue year-over-year growth for food delivery will be slightly lower than the Q3 growth rate,” he said.

Following that call, Meituan’s Hong Kong-listed shares plunged 12% to their lowest since March 2020, according to LSEG data.

Analysts hold ‘buy’ ratings

Despite macro uncertainties, analysts are still optimistic on Meituan’s outlook. On average, they have a “buy” rating with a price target of HK$149.34, according to FactSet data.

Fitch Ratings on Dec. 18 revised Meituan’s outlook to positive, from stable.

“Meituan’s strong cash flow generation in 9M23, which is beyond Fitch’s forecast, can be sustained, as its profitability has improved due to narrowing losses from the new initiatives segment and strong market positions in core segments,” said Fitch in a report.

“However, uncertainty remains over the impact on profitability from … competition from Douyin, which could result in operating cash flow volatility over the next 6-12 months,” Fitch said.

But experts were bearish on ByteDance’s possible acquisition of Ele.me.

“An entry into domestic food delivery is a daunting challenge that yields very little benefits for ByteDance,” said Blue Lotus Research Institute in a Dec. 19 report, reiterating its “buy” rating on Meituan with a price target of HK$118.

“Food delivery is a very heavily operations-focused business that requires a lot of operational efficiency and (crucially) leadership attention,” said tech research firm Momentum Works in December. “Buying and operating a large food delivery platform might not be the best solution for Douyin.”

The complex food delivery terrain makes it difficult for other players to pose a formidable challenge to Meituan, which is why analysts continue to favor the market leader.

“The fact that Ele.me falls much behind Meituan in market share is probably telling – when you are not the core of the group, your managers do not have the same level of commitment as compared to Meituan, for which success of food delivery is life and death,” tech research firm Momentum Works’ Jerry Chao said.

Technology

We’re increasing our Cisco Systems price target after an AI-fueled beat and raise

Published

4 hours ago

November 13, 2025

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We're increasing our Cisco Systems price target after an AI-fueled beat and raise

Technology

CNBC Daily Open: An AI and ‘everything else’ market in play in the U.S.

Published

4 hours ago

November 13, 2025

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CNBC Daily Open: An AI and 'everything else' market in play in the U.S.

Traders work on the floor of the New York Stock Exchange (NYSE) on Nov. 12, 2025 in New York City.

Spencer Platt | Getty Images

The divergence between the performance of the Dow Jones Industrial Average and Nasdaq Composite on Wednesday stateside reinforces the suggestion that there are two markets operating in the U.S.: one of an artificial intelligence and another of “everything else.”

Not only did the Dow rise, it also secured its second consecutive record high and closed above the 48,000 level for the first time.

The index, which comprises 30 blue-chip companies, is typically seen as a marker of the “old economy.” That is to say, it is mostly made up of large, well-established companies driving the U.S. economy, such as banks, healthcare and industrials, before Silicon Valley became a mini sun powering everything.

And it was those stocks — Goldman Sachs, Eli Lilly and Caterpillar — that lifted the Dow on Wednesday.

To be sure, new and flashy names, such as Nvidia and Salesforce, constitute the Dow too. But as the index is price-weighted, meaning that companies with higher share prices influence the Dow more, tech companies don’t exert as much gravity on it.

That’s in contrast to the Nasdaq, which is weighted by companies’ market capitalization, and dominated mainly by technology firms. The tech-heavy index fell as shares like Oracle and Palantir slipped — even Advanced Micro Devices’ 9% pop on its growth prospects couldn’t rescue the Nasdaq from the red.

It’s not necessarily a warning sign about overexuberance in AI.

“There’s nothing wrong, in our view, of kind of trimming back, taking some gains and re-diversifying across other spots in the equity markets,” said Josh Chastant, portfolio manager of public investments at GuideStone Fund.

But what investors would really like is if fork in the road merges into one. That tends to be the safer path to take.

What you need to know today

The Dow Jones Industrial Average notches record. The 30-stock index climbed 0.68% Wednesday stateside to close above 48,000 for the first time. The S&P 500 was mostly flat and the Nasdaq Composite fell 0.26%. The pan-European Stoxx 600 gained 0.71%.

Anthropic to spend $50 billion on U.S. AI infrastructure. Custom data centers will be first built in Texas and New York and go live in 2026, with more locations to follow. The facilities will be developed with Fluidstack, an AI cloud platform.

U.S. October jobs and inflation data might not be released. White House press secretary Karoline Leavitt told reporters that part of the fallout of the government closure could be lasting damage to the government’s data collection ability. But analysts think otherwise.

U.S. House of Representatives heading toward a vote. The House on Wednesday night stateside cleared a procedural hurdle required before the vote could begin on a bill that would end the government shutdown. Voting is expected to happen as of publication time.

[PRO] This U.S. mining stock is a top play: CIO. U.K. fund Blue Whale Capital’s Stephen Yiu said macroeconomic concerns, such as the U.S. fiscal deficit and the weakness of the dollar, could support the stock.

And finally…

People walk by the New York Stock Exchange (NYSE) on June 18, 2024 in New York City.

Spencer Platt | Getty Images

Why private equity is stuck with ‘zombie companies’ it can’t sell

Private equity firms are facing a new reality: a growing crop of companies that can neither thrive nor die, lingering in portfolios like the undead.

These so-called “zombie companies” refer to businesses that aren’t growing, barely generate enough cash to service debt and are unable to attract buyers even at a discount. They are usually trapped on a fund’s balance sheet beyond its expected holding period.

— Lee Ying Shan

Technology

Firefly Aerospace shares jump 15% on strong revenues, boosted guidance

Published

7 hours ago

November 12, 2025

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Firefly Aerospace shares jump 15% on strong revenues, boosted guidance

Jason Kim, chief executive officer of Firefly Aerospace, center, during the company’s initial public offering at the Nasdaq MarketSite in New York, US, on Thursday, Aug. 7, 2025.

Michael Nagle | Bloomberg | Getty Images

Firefly Aerospace‘s stock surged 15% on Wednesday after the space technology company issued better-than-expected third-quarter results and lifted its guidance.

Revenues in the third quarter jumped nearly 38% to $30.8 million from $22.4 million in the year-ago period and nearly doubled from the previous quarter.

Firefly’s net loss totaled $140.4 million, or $1.50 per share. The company said net loss included costs tied to its IPO, foreign exchange and executive severance

The company also lifted its outlook for the year, saying it now expects revenues to range between $150 million and $158 million. That’s up from previous guidance in the range of $133 million and $145 million.

This is Firefly’s second quarterly report as a public company. Last quarter, shares slumped after it posted a bigger loss and lower revenues than analysts were expecting.

The Cedar Park, Texas, company went public on the Nasdaq in August during a period of heightened enthusiasm toward space technology. The U.S. government and NASA have leaned on more contracts with companies like Firefly and Elon Musk‘s SpaceX to support moon missions.

But shares of Firefly have lost 70% of their value since their opening day close, and the company’s market capitalization has plummeted from about $8.5 billion to about $2.7 billion on Wednesday.

In September, Firefly shares sank after a rocket exploded during a ground test at the company’s Texas facility, days after receiving clearance from the Federal Aviation Administration over a separate incident. Firefly has since put “corrective measures” in place, the company said on Wednesday. Shares dropped 35% in September and are down 24% this month.

Firefly in July won a nearly $177 million contract with NASA for an upcoming moon mission, and in October, it announced its acquisition of defense tech firm SciTec to boost its national security portfolio.