Meituan CEO: in the near term we will continue to prioritise investing in market share over profitability

Meituan CEO: in the near term we will continue to prioritise investing in market share over profitability

Meituan, the leading food delivery and local services provider in China, has reported a significant drop in its adjusted net profit in the second quarter of 2025, as it continues to face intense competition in the "instant retail" sector. The company's revenue, however, grew by 11.7% to RMB91.8 billion, falling short of analysts' expectations [1].

During the earnings call, Meituan's CEO, Wang Xing, emphasized that in the near term, the company will prioritize investing in market share over profitability. This strategy is in response to the aggressive moves by competitors such as JD.com and Alibaba, which have launched massive subsidy campaigns to capture market share [2].

The intense competition has led to a significant drop in Meituan's adjusted net profit, which fell by 89% to RMB1.49 billion. Despite this, Wang Xing highlighted the company's strong cash position, with RMB180.4 billion in cash and equivalents, which provides the financial flexibility to outlast rivals in a prolonged subsidy war [2].

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. This regulatory pressure adds a layer of complexity to Meituan's operations and could lead to further margin compression [2].

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 [2].

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

References:
[1] Reuters. (2025, Aug 27). Profit dives for China's top food delivery firm Meituan amid intense competition. Retrieved from https://www.reuters.com/technology/profit-dives-chinas-top-food-delivery-firm-meituan-amid-intense-competition-2025-08-27/
[2] 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/