Summary of Key Points
Meituan's market value plummeted from a peak of HK$2.6 trillion in 2021 to just over HK$390 billion in 2026, representing a loss of HK$2.2 trillion (equivalent to the combined value of Pinduoduo and two JD.com companies). Its profit also turned from HK$35.8 billion in 2024 to a loss of HK$23.4 billion in 2025. The reasons for this decline include: its food delivery business being squeezed by both JD.com and Alibaba, its in-store services facing competition from Douyin, and the failure of its new businesses to take off. Meituan has had to rely on an investment portfolio worth HK$65 billion (in companies like Zhipu AI and Li Auto) to stay afloat temporarily. This reflects a shift in China's internet industry from a period of expanding market share to one of competing for existing resources.
I. From HK$2.6 trillion to HK$390 billion: Meituan's "Waterloo"
Meituan's decline is not accidental:
- Stock price plunge: The initial offering price was HK$69 per share, which peaked at HK$460 but has now dropped to HK$64—representing a 25% discount on the initial price.
- Profit reversal: From a profit of HK$35.8 billion in 2024 to a loss of HK$23.4 billion in 2025, a difference of nearly HK$60 billion. Wang Xing attributes this to a "money-burning war," but it was precisely this strategy that helped Meituan win against numerous competitors before.
- Market sentiment: The evaporated market value of HK$2.2 trillion indicates that investors no longer believe Meituan can regain its previous growth momentum. Wang Xing's acknowledgment of mistakes and the CFO's call for share repurchases more closely resemble a cry for survival than a display of confidence.
II. The Food Delivery Market: JD.com and Alibaba Join Forces to Corner Meituan
Meituan once held over 90% of the food delivery market, but now it holds only just over 50%, due to the entry of two powerful competitors:
- JD.com's retaliatory move: JD.com entered the food delivery business by offering zero commissions to merchants, providing insurance for riders, and even delivering orders personally. In 90 days, JD.com's daily order volume reached 25 million, attracting a large number of merchants and riders.
- Alibaba's strategic move: Alibaba upgraded Ele.me to "Taobao Flash Purchase" and promoted it on the Taobao homepage (with an audience of 1 billion users), investing HK$50 billion in subsidies (e.g., 9 yuan for crayfish and 1 yuan for milk tea). This strategy led to a rapid increase in daily orders, exceeding 80 million.
- Endless money burning: The combined investment of the three companies amounted to nearly HK$200 billion, resulting in Meituan's loss of HK$23.4 billion. Meituan used to control merchant commissions and impose penalties on riders for delays; now it must appease both merchants and riders by abolishing such penalties and improving benefits.
III. Douyin Steals Meituan's Profitable Business Models
Meituan's most profitable segments were not food delivery but its in-store services (such as group dining and hotel reservations), which did not require the maintenance of a large workforce and relied solely on commissions and advertising revenue. However, Douyin has changed this:
- Douyin's influence: Users who browse Douyin often buy coupons for services like hot pot or massage treatments, bypassing Meituan altogether. In 2025, Douyin's in-store transaction volume exceeded HK$850 billion, while Meituan took over a decade to reach the same figure. In popular cities, Douyin has even surpassed Meituan.
- Attention competition: While Meituan has 100 million daily active users, Douyin has 700 million. Users spend 2-3 hours on Douyin daily, compared to only 2-3 times on Meituan. Douyin can attract users when they are looking for entertainment, while Meituan can only reach them when they are in need of services—essentially, Douyin has cut off Meituan's source of revenue.
- Alibaba's additional threat: Gaode has also entered the market with a "street ranking" feature (based on navigation data, more reliable than Meituan's user reviews), attracting 660 million users in just 100 days and further dividing the market share.
IV. Is the HK$65 Billion Investment a Lifeline or Just a Band-Aid?
Although Meituan's core business is losing money, Wang Xing has HK$65 billion invested in companies like Zhipu AI and Li Auto, planning to use the proceeds for share repurchases (a strategy Tencent has used before). However, there are challenges:
- One-time benefit: The funds will be gone once sold; what will happen next year?
- Core business weakness: Relying on investments to boost the market value suggests that Meituan's food delivery and in-store services are no longer competitive.
- Differentiation between financial investment and strategic focus: Investments in Zhipu AI and Li Auto may not be directly related to Meituan's core business. Whether this combination can sustain Meituan as a sustainable company is uncertain.
V. The "Zero-Sum Game" of China's Internet Industry
Meituan's struggles reflect the broader situation in the industry:
- End of growth: China's mobile internet user base has peaked at 1.1 billion, and new users are scarce. Companies must compete for existing resources.
- Prisoner's dilemma: The first to stop spending will fail. Wang Xing calls for "rational development," but JD.com and Alibaba cannot afford to slow down, and Meituan也不敢. In the end, everyone will suffer, with only consumers and riders benefiting temporarily (through subsidies and better benefits).
- The outcome is not victory but mutual decline: The food delivery market is only HK$1 trillion in size, and the combined investment of these three companies has reduced its share. Profits have vanished, market value has dropped, and jobs have been lost—this is the harsh reality of the current "zero-sum game."
Meituan's Future: From a "Food Delivery Company" to a "Technology Company?"
Meituan still has advantages: it holds over 50% of the food delivery market and 60% of high-end orders, with a solid base of riders and merchants. It hopes to return to profitability in the second quarter of 2026. To break this cycle, it needs to innovate:
- AI transformation: With its vast user data (100 million daily active users and millions of riders), Meituan can use AI to optimize deliveries, predict demand, and assist merchants in their operations, transforming from a "food delivery company" to a "technology-driven local services provider."
- Business expansion: Wang Xing's vision (in investing in AI and new energy) is promising, but this investment must become part of a strategic plan. Focusing solely on food delivery will keep Meituan a "traditional business"; only by redefining the industry through technology can it become a global leader.
To conclude, market value is not the most important factor. Actions like providing better benefits for riders (such as insurance) and reducing commissions for merchants are more meaningful than simply hoping to restore the market value to HK$2.6 trillion. Wang Xing has shown determination, but what's really needed now is a clear vision for the company's future direction.
(Data sources: Hong Kong Stock Exchange, company financial reports, third-party research. The views expressed do not constitute investment advice.)