Meituan share price has continued falling in Hong Kong this month as concerns about competition in China’s food delivery industry continued. After peaking at H$217 in October last year, it has plunged by over 40% to the current $130, and is hovering at the lowest level since September.
Why Meituan share price is falling
Meituan, the biggest food delivery company in China, has plunged in the past few months for three main reasons.
First, there are concerns about the soaring competition in China, where firms like Alibaba and JD are also large players. Alibaba owns Ele.me, which has a growing market share in the food and grocery delivery industries.
JD.com has become the biggest headache for Meituan as it focuses on a cash-burning approach to gain market share for the JD Takeaway service it launched in February. It announced a $1.4 billion discount to woo customers, waived fees for some restaurant chains, and started a journey to hire over 100,000 delivery riders.
This strategy aims to benefit the two sides of the pendulum. Restaurants can get more money, while customers receive substantial discounts. As a result, analysts at JPMorgan believe that JD has taken some market share from Meituan, which controls about 75% of the market share.
On the positive side, analysts believe that JD’s strategy will not work out in the long term because of the substantial losses it will incur.
Second, Meituan’s share price has crashed as investors have mostly moved to companies that have an AI element in their operations. China’s role in the AI race became more pronounced earlier this year when DeepSeek launched its application and AI model.
Third, the stock dropped after Beijing urged companies to lower online fees. The main regulator said that firms should have reasonable fees that takes into consideration to customers and merchants.
Is it safe to buy the dip?
The situation is not going well for Meituan as it faces major challenges. However, the company has fended off competition in the past and thrived.
Most importantly, the management has expanded in other areas, including groceries and electronics, where JD has a substantial market share.
Also, Meituan has invested heavily on the Keeta application, which is available in places like Hong Kong, Saudi Arabia, and the United Arab Emirates. The company sees these as rich places where it can grow as it faces stiff competition at home.
This week’s results showed that Meituan’s revenue rose by 18% to RMB86.6 billion as its core business achieved an operating profit of RMB 13.5 billion.
The data also showed that revenue of the new initiatives division rose by 19.2% to RMB 22.2 billion as it narrowed its operating loss by 17.5%
Meituan share price analysis
The daily chart shows that the Meituan stock price has retreated in the past few months, moving from $217 in October to H$129 today. It has dropped below the 50% Fibonacci Retracement level and the key support level at H$133.6.
The stock has formed a death cross as the 200-day and 50-day WMA crossed each other in April. It has also formed a descending triangle pattern.
Therefore, the path of least resistance is bearish, with the next target being at H$100, down by 22.50% from the current level. It will then bounce back later this year or in 2026 as the price war continues and its international growth continues.
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