While a large part of the world focuses on an international volatile trade in trade, two of the largest Chinese internet companies inflict more damage to each other.
JD.com Inc. launched an expensive battle to steal market share far from the leader of Meituan food delivery, while the latter has encroached on the bastion of electronic commerce of the first. The actions listed in Hong Kong of companies fell by approximately 30% compared to the summits of March, which allowed around $ 70 billion of combined market value.
Investors are preparing for a prolonged struggle that will harm the profits from the pair. Analysts have reduced the price objectives for both actions, and the defensive positioning has increased options on the market.
“The two parties are less well subtitled in the short term, and it is not known how long this battle will last,” said Daisy Li, a fund manager at EFG Asset Management HK Ltd. The level of intense competition on the Chinese food delivery market will harm profitability, she added.
Even if Donald Trump’s prices removed the steam from the recent China technological gathering, the impact of this national rivalry stands out. Meituan and JD.com ranked among the eight worst artists from the Hang Seng Tech index this year after the two in the upper half in 2024.
The Switch came while JD.com has deployed a cash burns strategy to promote its JD Takeaway food platform, which was officially launched in February. The company based in Beijing has announced more than 1.4 billion discounts for consumers, commission fees have gone to certain merchants and aims toto hire100,000 full -time riders.
Jpmorgan Chase & Co. estimates that JD.com has taken around 5% of the Chinese food market share, which was previously divided at around 75% for Meituan and 25% for Ele.me.’s Alibaba Group Holding Ltd. The brokerage estimates that on the current scale, JD to take away could generate up to 18 billion yuan ($ 2.5 billion) in annualized losses, annihilating 36% of the operating profit of its parents for 2025.
“We do not think it is a lasting strategy because of the financial impact on the P&L group,” wrote analyst Alex Yao in a note on Tuesday. “It is prohibitive for a new entrant to obtain a large market share on the Chinese food delivery market thanks to a deeply subsidized growth strategy.”
Meituan has managed to resume the food delivery competition in the past, but JD.com is considered a formidable challenger given its existing delivery network. At the same time, Meituan has been piercing this year in the main fast field products of JD.com, IT and electronics.
While the two companies strongly depend on Chinese consumption, Meituan has passedaggressivelyOn expansion in food delivery abroad via its Keeta application.
“JD does not have many growth opportunities in China and has very little exposure abroad,” said Felix Wang, head of world technology and software at Hedgeye Risk Management. In this context, his incursion to remember costly JD is more a defensive decision and “not entirely on food delivery”.
Sales analysts have become more cautious while the skirmish dragged. Although the two shares are massively purchased, the average price target for Meituan is down 8% compared to a March and JD.com summary fell by around 4%.
The costs of coverage against the drop in the two actions remain well above their one year averages. For JD.com, the ratio of exceptional leafy options to be rejected has reached its highest level since August, the classification among the most negative actions in Hong Kong.
This story was initially presented on Fortune.com
