Meituan Earnings Miss: Shares Plummet Amid Grim Outlook and Intense Competition.

Meituan's shares have slid to a one-year low in Hong Kong after the company posted a sharp drop in profits and warned of intense competition in the food-delivery sector. The company's net profit for Q2 tumbled 97% compared to last year, missing analysts' estimates. Meituan expects fierce competition to continue, weighing on its financial results in the near term, but is confident about the long-term prospects of its "instashopping" business.

Meituan's shares have slid to a one-year low in Hong Kong following the company's sharp drop in profits and warnings about intense competition in the food-delivery sector. The company reported a 97% plunge in its net profit for the second quarter of 2025, falling significantly short of analysts' estimates [3]. This decline was primarily driven by aggressive competition from rivals such as JD.com and Alibaba, who have launched massive subsidy campaigns to capture market share [1].

Meituan's CEO, Wang Xing, emphasized that in the near term, the company will prioritize investing in market share over profitability. This strategy is aimed at countering the aggressive moves of competitors and maintaining the company's dominant market position [1]. Despite the significant drop in profits, Meituan's strong cash position, with RMB180.4 billion in cash and equivalents, provides the financial flexibility to outlast rivals in a prolonged subsidy war [1].

The company's revenue grew by 11.7% to RMB91.8 billion, but this growth was not enough to meet analysts' expectations [3]. The intense competition has led to a significant drop in Meituan's adjusted net profit, which fell by 89% to RMB1.49 billion. Regulatory scrutiny is another challenge for Meituan. The Chinese government has summoned the company, along with JD.com and Ele.me, to address excessive discounting and unfair pricing practices, adding a layer of complexity to Meituan's operations [1].

Meituan's international expansion efforts also present both opportunities and risks. The company's investments in Brazil and the expansion of its Keeta brand into the Middle East offer a path to growth but also introduce new risks, such as increased costs and margin compression [1].

Despite the challenges, Meituan's Instashopping segment has shown strong growth. According to a recent report by CLSA, the company's core local commerce business saw a 12% year-over-year (YoY) increase in total revenue, reaching RMB92.1 billion. The company's gross transaction value (GTV) for Instashopping also showed a 10% YoY increase to RMB67 billion [2].

Long-term investors should closely monitor Meituan's ability to balance growth with profitability as the subsidy war evolves. The company's strategy of prioritizing market share over profitability in the near term reflects its efforts to maintain its dominant market position amidst intense competition and regulatory scrutiny.

References:
[1] AInvest. (2025, Aug). Meituan strategic resilience: China food delivery price war calculated bet. Retrieved from https://www.ainvest.com/news/meituan-strategic-resilience-china-food-delivery-price-war-calculated-bet-long-term-2508/
[2] CLSA. (2025, Aug). Meituan: Instashopping achieved strong Q2 growth in order volume and GTV, strengthening market position. Retrieved from https://www.clsa.com/news/meituan-instashopping-achieved-strong-q2-growth-order-volume-gtv-strengthening-market-position-2508/
[3] Finance.Yahoo. (2025, Aug). Meituan sales weaken, profit plummets amid fierce competition. Retrieved from https://finance.yahoo.com/news/meituan-sales-weaken-profit-plummets-093000058.html