Home Business Meituan’s Q3 Outlook Weakens, Prompting Drop in Chinese Food Delivery App Shares

Meituan’s Q3 Outlook Weakens, Prompting Drop in Chinese Food Delivery App Shares

Meituan’s Q3 Outlook Weakens, Prompting Drop in Chinese Food Delivery App Shares

Meituan’s Hong Kong-listed shares dropped more than 5% after CEO Wang Xing warned of a potential slowdown in the food delivery sector in the next quarter. Despite posting strong second-quarter results, Wang noted that extreme weather conditions and the recovery of offline consumption are impacting the industry. He mentioned that consumers are dining out more as the economy recovers, which could lead to lower demand for food delivery. Meituan leads China’s food delivery market, holding nearly 70% of the market share. However, Wang remains confident in the long-term growth of the company’s food delivery business and plans to activate strategies to capture demand and stimulate recovery. Meituan also aims to leverage artificial intelligence and autonomous delivery technology to improve costs and services for clients.

The extreme weather in regions such as Beijing, Tianjin, and several provinces caused widespread flooding and disrupted business operations, leading consumers to stock packaged food instead of ordering fresh food delivery. In some cities, food delivery services were even suspended to ensure safety. Wang acknowledged that these challenges are affecting Meituan’s business. Additionally, the recovery of offline traffic and travel demand in the third quarter is releasing consumers’ pent-up demand for offline consumption, which temporarily squeezes food delivery transactions as people go out more often. Despite these short-term headwinds, Meituan remains the dominant player in China’s food delivery market.

While Meituan’s shares experienced a decline, Xiaolin Chen, head of international at KraneShares, remains optimistic about the company. KraneShares has a price target of HK$205 on the stock, representing a 35.2% upside from the current price. Chen believes that Meituan gained significant market share during the pandemic, especially in lower-tier cities, which will likely remain loyal to the platform. Meituan’s CEO believes that the temporary slowdown in order volume growth is due to external factors and expresses confidence in the company’s ability to capture demand and stimulate recovery through product and operational strategies. Additionally, Meituan is exploring the use of AI and autonomous delivery to enhance efficiency and service quality.

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