Meituan shares dropped almost 10% after the company warned of major losses this quarter from a price-based battle with Alibaba Group Holding Ltd. and JD.com Inc. China’s food delivery leader issued its dire prediction after reporting “irrational competition” had slashed its profit in the June quarter. Meituan’s net income plummeted 97% to RMB365.3 million despite a 12% rise in revenue. The warning further unnerved investors, who had wiped out about a quarter of Meituan’s market value in 2025. Some analysts also downgraded their ratings.
The plunge in profitability illustrates how China’s leading food delivery platform is facing its greatest challenge in years from twin rivals that — till recently — had largely ceded the domestic meal arena. In 2025, that changed when JD.com, pursuing growth during a consumption downturn, and Alibaba’sEle.me began offering generous subsidies to cash-strapped diners.
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 Aug 27.
“We expect there will be continued fierce competition in the near term,” Chen said. “That will bring a negative impact on our financial results.”
The three-way battle in the food arena has 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 Aug 28.
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 US$100 billion of their combined market value at one point.
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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 2Q2025, 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 1H2025 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 1H2025 vs. 37% a year earlier.
