Meituan's Instant Retail Business Losses Expand: In-depth Analysis of Market Competition Pattern

Based on collected data and market information, I will systematically analyze the market competition pattern behind the expanding losses of Meituan’s instant retail business.

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As a leading enterprise in China’s local life services sector, Meituan is currently facing severe profit pressure. According to the latest financial data [0], Meituan’s Hong Kong stock market capitalization is approximately HK$637.2 billion, with a share price of about HK$105.4. However, the stock price has been under continuous pressure—falling 30.06% in the past year and 64.46% cumulatively over the past five years, reflecting the market’s deep concern about the company’s profit prospects [0].

From the perspective of key financial indicators, Meituan is currently in a state of continuous loss. The price-to-earnings ratio is -155.44 times, indicating that the company has not yet achieved stable profitability; the return on net assets is -2.05%, and both the net profit margin and operating profit margin are negative [0]. In the 2025 Q3 financial report, the loss per share was $2.84, significantly lower than the market expectation of -$2.11, exceeding the expected loss by about 34% [0].

However, the revenue side performed relatively positively. The third-quarter revenue reached $114.02 billion, exceeding the market expectation of $104.4 billion, with an increase of about 9.22% [0]. This situation of ‘increasing revenue without increasing profit’ precisely reflects the price war pressure and fierce market competition Meituan faces in the instant retail field.

The takeout price war that started in February 2025 is the direct reason for the expansion of Meituan’s instant retail business losses [1]. Morningstar research points out that price competition further deteriorated in July 2025, and some improvement signs appeared only in August [1]. Meituan clearly stated in its financial report that it will continue to adopt subsidy strategies in the third quarter to consolidate market share and attract customers [1]. Although this strategy of ‘trading price for volume’ further compresses profit margins in the short term, the company believes it is a necessary investment to stabilize its market position. JPMorgan Chase expects that Meituan’s takeout business losses will bottom out in the third quarter of 2025 [1].

The rapid rise in sales costs is another key factor. Data shows that Meituan’s sales costs increased by 27% from RMB 48.4 billion in the second quarter of 2024 to RMB 61.4 billion in the same period of 2025, accounting for 66.9% of revenue from 58.8% [1]. The main reasons for the cost increase include:

• Continuous growth in the number of instant delivery transactions
• Increase in rider subsidies (to cope with competition)
• Expansion of grocery retail business
• Development of overseas business (Keeta)
• Increase in social security payment costs for riders [1]

Since the second quarter of 2025, Meituan has gradually paid social security for full-time and stable part-time riders nationwide, and it is expected to cover more than one million riders by the end of the year, which will further increase the company’s fixed costs [1].

Despite facing fierce competition, Meituan still maintains its market leadership in the instant retail field. According to JPMorgan Chase’s estimate in April 2024, Meituan’s share in China’s takeout market is about 72.2%, Ele.me (owned by Alibaba) accounts for 22.4%, and JD.com accounts for 5.4% [2]. In the instant retail industry, Meituan Flash Purchase and Ele.me together occupy more than 65% of the market share [3]. Morningstar data shows that in 2024, the total transaction value shares of Meituan, Alibaba, and JD.com in the instant delivery market were 73%, 21%, and 5% respectively [2].

: Morningstar research believes that Alibaba is the main winner in the takeout price war [2]. With strong cash reserves and more concentrated strategic management (e-commerce business group), Alibaba is effectively using its resources to launch an offensive. Morningstar expects that by 2027, Alibaba’s share in the instant delivery market will rise to 40%, while Meituan’s will drop to 55% [2].

: JD.com’s expansion pace in the instant retail field is significant. Data shows that the daily order volume of JD Takeout soared to 5 million orders in the first month of its launch, and the number of users jumped by 70% [4]. BOCOM International analysis points out that JD.com’s entry into the takeout market is intended to supplement consumption scenarios, and it is expected that the instant retail business will become its second growth engine [3].

The market competition pattern is evolving from Meituan’s ‘monopoly’ to ‘duopoly’. Morningstar expects that with Alibaba’s aggressive investment, the market competition pattern will tend to stabilize, because Alibaba may be the only company that has both financial resources and strategic motivation to increase market share [2]. It is worth noting that short video platforms such as Douyin are also actively expanding into the local life services sector, further increasing the complexity of market competition.

Facing fierce market competition, Meituan has adopted diversified countermeasures:

: Launched differentiated services such as ‘Pinhao Fan’ and ‘Shen Qiang Shou’ to enhance user stickiness and increase penetration in both high and low-priced markets simultaneously [1]. The company upgraded its Flash Purchase business to ‘Wan Wu Dao Jia’ (Everything Home Delivery), covering a wider range of instant retail scenarios [4].

: Meituan has a huge user pool of about 700 million users and a delivery network of 60 million orders per day, which is its core moat to cope with competition [4].

: Expanding overseas markets through the Keeta brand to find new growth points, but currently the international business is still in the high-investment stage and has not yet achieved profitability [1].

The current market investment sentiment towards Meituan is negative. Analyst rating distribution shows that 100% of institutions give a ‘sell’ rating [0]. JPMorgan Chase predicts that Meituan’s adjusted net profit in the second quarter will drop by 39% [5].

The core challenge lies in: how to improve profitability while maintaining growth momentum, and balance the contradiction between ‘growth’ and ‘profit’ [1]. In the current anti-involution policy environment, price wars between platforms may be subject to regulatory constraints, which may provide Meituan with a breathing opportunity [1].

The expansion of Meituan’s instant retail business losses is the result of multiple factors: the price war that started in early 2025 led to increased subsidy expenditures; rising rider costs and social security payments increased operational pressure; active attacks by competitors such as Alibaba and JD.com eroded market share. Although Meituan still maintains its market leadership with a huge user base and delivery network, the market pattern is shifting to a duopoly competition between ‘Meituan + Alibaba’. In the short term, Meituan’s stock price may continue to be under pressure; but in the long term, as the market competition pattern stabilizes, whether Meituan can achieve profit improvement in the instant retail field will depend on its cost control capabilities and the construction of differentiated competitive advantages.

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[0] Jinling AI Financial Database - Meituan (3690.HK) Company Overview and Financial Data

[1] Yahoo Finance - Post-Earnings: Comprehensive Analysis of Major Banks’ Latest Ratings on Meituan After Earnings Announcement (https://hk.finance.yahoo.com/news/綜合大行於美團-03690-hk-公布業績後最新評級-040327216.html)

[2] Yahoo Finance - Morningstar: Alibaba is the Main Winner in China’s Takeout Price War, but Meituan’s Dominance Remains Unchanged (https://hk.finance.yahoo.com/news/晨星-中國外賣價格戰阿里成主要贏家但美團主導地位不變-023731476.html)

[3] Yahoo Finance - Major Bank: BOCOM International Says JD.com’s Entry into Takeout via Instant Retail is to Supplement Consumption Scenarios (https://hk.finance.yahoo.com/news/交銀國際-京東即時零售進入外賣意在補足消費場景-032529912.html)

[4] Yahoo Finance - JD.com vs Meituan: Who Will Rewrite the Pattern of China’s Internet in the Instant Retail War? (https://hk.finance.yahoo.com/news/京東美團-即時零售-大戰誰將改寫中國互聯網格局-085004498.html)

[5] Yahoo Finance - Forecast: Brokerages Expect Meituan (03690.HK) Adjusted Net Profit to Drop 39% in Q2 (https://hk.finance.yahoo.com/news/券商料美團-03690-hk-第二季經調整溢利淨額跌39-030930610.html)