Meituan’s Collapse: The Price‑War Paradox
The latest disclosures from Meituan, China’s dominant “super‑app,” spell a grim verdict for a company that has long been hailed as a bellwether for the country’s consumer‑discretionary boom. In a stark warning that reverberated through the Hong Kong market on 16 February 2026, Meituan announced a projected annual loss of US$3.5 billion for 2025—its biggest deficit since 2021. The figure is not a mere statistical aberration; it is the crystallisation of a relentless price‑war that has eroded margins across the food‑delivery segment and has now threatened to dismantle Meituan’s once‑invincible business model.
The Price‑War Engine
Meituan’s core revenue stream—delivery of food and other local services—has been strangled by a brutal, price‑based contest with rival platforms, especially with its principal competitor, Ele.me, and the ever‑expanding presence of Alibaba’s Hema and Tencent’s Meituan‑Dianping partnership. The relentless discounting strategy, driven by the pursuit of market share rather than profitability, has pushed operating costs beyond sustainable limits. The company’s own statements underscore this reality: “the brutal price‑based war in food delivery is eroding margins at China’s largest internet companies.” The loss figure is, therefore, not an anomaly but an inevitability born of a market strategy that prioritises volume over value.
Market Repercussions
The announcement was met with immediate market turbulence. The Hang Seng Index slipped by 2.7 percent across back‑to‑back sessions, with Meituan’s shares falling over 3 percent on 16 February, trading at HK$82.05—barely 0.1 percent below its previous close. Even the broader market, which had been buoyed by a robust lunar‑year performance, found itself stalling. The stock’s valuation, standing at a price‑earnings ratio of 16.67 against a backdrop of a 52‑week low of HK$80.8, now reflects the market’s loss of confidence in the company’s future earnings potential.
The ripple effect extends beyond the share price. The announcement coincided with a 465‑point drop in the Hang Seng Index, a 48‑point fall in the HSTI, and a wider sentiment of uncertainty that left investors scrambling to reassess their exposure to China’s consumer‑discretionary sector. The fact that Meituan’s loss guidance came at a time when the Hong Kong market was already grappling with regulatory scrutiny—seven platform companies were being called in by China’s State Administration for Market Regulation—only intensified the fear that the government might intervene further, potentially tightening an already fraught operating environment.
Strategic Impasse
Meituan’s fundamentals paint a picture of a company that once rode the wave of consumer spending. With a market cap of 501.78 billion HKD and a 52‑week high of HK$189.6, the platform has enjoyed robust growth. Yet its core business is now in a strategic impasse: the price‑war forces it to either keep bleeding money to stay market share or pivot to a higher‑margin, diversified model that has yet to materialise. The company’s 2025 guidance—anticipating losses between 2.827 billion and 2.962 billion euros—shows a stark mismatch between revenue streams and cost structures, hinting at a deeper structural flaw that cannot be remedied merely by raising prices or cutting costs.
A Call for Critical Reflection
The narrative that emerged from Meituan’s disclosures is clear: a market that rewards aggressive pricing over sustainable profitability is unsound. The company’s failure to curb the price war, despite the clear erosion of margins, signals a strategic blindness that investors, regulators, and stakeholders must confront. If Meituan is to survive, it must radically rethink its competitive positioning, perhaps by sharpening its focus on high‑margin services such as travel, entertainment, and premium logistics—areas where the platform has demonstrated strength but remains underexploited.
In the meantime, the 3 percent plunge in Meituan’s stock, the broader market’s slide, and the looming regulatory scrutiny collectively serve as a cautionary tale. The price‑war, while short‑term lucrative, has turned into a long‑term liability that threatens the very foundations of China’s internet‑based consumer economy. Only a decisive, profit‑centric strategy will rescue Meituan from the precipice it now stands upon.
