Meituan's Strategic Rebound: A Sustainable Second Act or Fleeting Recovery?

Meituan, China's dominant local services platform, has long been a study in resilience. After years of aggressive expansion and margin compression, the company appears to be recalibrating its strategy in 2025. Recent operational and financial developments suggest a potential rebound, but whether this signals a sustainable transformation or a temporary reprieve remains an open question.

Q2 2025: A Mixed Bag of Growth and Margin Pressure

Data from Meituan's Q2 2025 earnings summary reveals a 11.7% year-over-year revenue increase to RMB 91.84 billion, driven by both core local commerce and new initiatives according to the earnings summary. The core segment, which includes food delivery and quick commerce, saw a 20% revenue jump to RMB 69.4 billion, with daily average delivery orders rising 15% to 19.4 million. However, profitability metrics tell a different story. Operating profit plummeted 98% year-over-year to RMB 226 million, while net profit fell by 96.8% to RMB 365 million, attributed to intensified competition and higher customer incentives. This stark divergence between top-line growth and bottom-line performance underscores the fragility of Meituan's current model.

Strategic Initiatives: AI-Driven Efficiency or Costly Gambit?

Meituan's Q3 2025 strategic focus appears to hinge on AI and digital transformation. The company has invested heavily in AI-powered route planning, dynamic pricing, and predictive demand forecasting to optimize delivery times and inventory management according to Q3 2025 reports. These initiatives have fueled 29% year-over-year revenue growth in new segments like quick commerce and Instashopping as reported by Global X ETFs. Yet, such investments come at a cost. Meituan has explicitly warned that its core local commerce segment will likely incur "substantial losses" in Q3 2025 due to strategic spending on technology and ecosystem sustainability according to financial disclosures. While these moves aim to strengthen long-term competitive advantages, they risk alienating short-term investors who prioritize profitability.

User Growth and Market Positioning

User metrics remain a critical barometer. Meituan's daily active delivery orders have climbed steadily, reflecting its dominance in China's on-demand economy. However, the company faces mounting pressure from rivals like Alibaba's Elema and Pinduoduo's Temu, which are aggressively undercutting prices. To maintain its edge, Meituan must balance user acquisition with margin preservation-a challenge it has historically struggled with.

The Path to Sustainability

The sustainability of Meituan's rebound hinges on two factors: capital discipline and execution of its AI-driven strategy. While the company's Q2 results highlight growth in high-margin services like quick commerce, its reliance on subsidies to retain users in core segments remains a vulnerability according to financial analysis. Additionally, the board's approval of Q3 financial results on November 28, 2025 as reported by financial news outlets, will provide critical insights into whether management is prioritizing long-term value creation over short-term gains.

Conclusion: A Tenuous Rebound

Meituan's 2025 rebound is built on a fragile foundation. The company's strategic investments in AI and digital transformation are promising, but they come at the expense of immediate profitability. For this to be a sustainable second act, Meituan must demonstrate that its operational improvements can translate into durable margin expansion. Until its Q3 2025 earnings report, scheduled for November 29 as announced in financial calendars, offers concrete evidence of this, investors should remain cautious. The question is not whether Meituan can innovate-it has always done so-but whether it can do so without sacrificing the financial health that underpins its market leadership.