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.
