Summary of Key Points
On June 1st, Meituan released its financial results for the first quarter of 2026, showing revenue growth and a narrowing of losses, which exceeded market expectations. Meanwhile, Alibaba and JD.com also reported improvements in their delivery/instant retail businesses. The industry believes that the peak of subsidies in the delivery war may have passed, and the performance of internet companies is gradually improving from the worst state in the third quarter of 2025. However, whether the competitive landscape has truly improved remains to be seen, as this will determine whether the Hang Seng Tech Index can shed its nickname as the "Hang Seng Delivery Index" and start to recover.
I. Meituan's Q1 Performance: Less Losses, Better than Expected
Meituan’s revenue for Q1 was 91 billion yuan, a year-on-year increase of 5.6%. The adjusted net loss was 5 billion yuan (compared to 15.1 billion yuan in Q4 and 16 billion yuan in Q3 of 2025), which is nearly 30% less than the market's forecast of 7 billion yuan. The reason for the reduced losses is an improvement in performance on a quarter-on-quarter basis, although costs remain high:
- Rider subsidies and expansion leading to increased costs: Selling costs rose by 20.2% to 65.1 billion yuan, mainly due to increasing subsidies to retain riders and expanding into grocery retail and overseas businesses.
- Sharp increase in marketing expenses to attract users: Marketing expenditures increased by 51.1% to 23 billion yuan, aimed at advertising and promotions to boost user activity during the delivery war.
Experts comment that the performance exceeded expectations, but with three consecutive quarters of losses, whether the company can turn around remains to be seen.
II. The Delivery War: Has the Most Intense Subsidy Period Passed?
Not only Meituan, but also Alibaba and JD.com’s related businesses are showing signs of improvement:
- Alibaba: Instant retail revenue increased by 57% (thanks to the "Taobao Flash Sale" launched in 2025), and the order structure has been optimized, with more high-value food and non-food products being sold, resulting in improved per-unit profits.
- JD.com: New businesses (including JD Delivery) saw a significant reduction in losses on a quarter-on-quarter basis, with both user scale and shopping frequency reaching record levels.
Industry insiders believe that the period of excessive spending on subsidies in the delivery industry may have ended, and performance is expected to gradually recover.
III. Internet Companies as a Whole: Moving from Worst to Improvement
A common trend among these three companies is that the third quarter of 2025 was the worst period for their financial performance. There has been continuous improvement since then, with Q4 and Q1 of 2026 showing positive trends. This is because companies have begun to adapt to competition by using technology to reduce costs (such as optimizing rider routes) and exploring new markets (overseas businesses, grocery retail). Experts expect that year-on-year figures will also improve in the coming quarters.
IV. Can the Hang Seng Tech Index Turn Around?
The Hang Seng Tech Index was previously nicknamed the "Hang Seng Delivery Index" due to the significant impact of Meituan, Alibaba, and JD.com’s delivery/instant retail businesses on its performance. Now that their performance is improving, for the index to recover, one condition must be met: a genuine improvement in the competitive landscape—i.e., reduced subsidies and stable profitability for companies. If the reduction in losses is only temporary and the underlying competitive issues are not resolved, the index will still struggle to improve. We are still in the observation phase.
V. What Investors Care Most About: Cost Control + New Growth Drivers
Investors are concerned about more than just the current level of losses; they focus on two key areas:
1. Cost control: Whether companies can reduce subsidies and stop spending excessively to attract users.
2. New sources of revenue: Examples include Meituan’s overseas business and grocery retail, Alibaba’s Flash Sale, and JD.com’s new businesses. Only by finding stable growth drivers can companies move from losses to profitability, which will drive up stock prices and help the index recover.
In summary, the performance of internet companies is starting to improve, but for the Hang Seng Tech Index to truly turn around, the competition needs to ease, and companies must be able to generate consistent profits. While there are signs of improvement, it’s not yet time to fully relax.