Meituan Faces Market Challenges Amid Stake Trimming and Downgrades

In a turbulent week for Meituan, the Hong Kong Stock Exchange-listed company has seen its shares decline significantly, reflecting broader market uncertainties and strategic shifts within the company. As of June 18, 2025, Meituan’s stock fell over 3%, closing at HKD 133, down from its previous close price of HKD 138.1 on June 16, 2025. This decline is part of a broader market trend, with the Hang Seng Index (HSI) dropping 281 points and the Hang Seng China Enterprises Index (HSCEI) falling 102 points.

Stake Trimming by Founder Raises Concerns

The market’s reaction was partly fueled by news that Meituan’s founder, Wang Xing, has been trimming his stake in Li Auto, another company listed on the Hong Kong Stock Exchange. Over four consecutive days, Wang Xing reduced his holdings in Li Auto, which saw its shares fall as a result. Li Auto clarified that these actions were personal and did not involve Meituan’s holdings. Despite this, the market reacted negatively, with Li Auto’s shares dropping by 2.6%.

Analyst Downgrades and Strategic Shifts

Adding to the pressure, Bernstein downgraded Meituan to “market perform,” citing concerns over margin pressures and expansion risks. This downgrade reflects broader concerns about Meituan’s ability to sustain its growth trajectory amidst increasing competition and operational challenges.

Competitive Landscape and Strategic Moves

In the competitive landscape, Richard Liu, Chairman of JD-SW, announced plans to launch a food delivery business model distinct from Meituan’s. This move signals a strategic shift in the food delivery market, potentially impacting Meituan’s dominance in this sector.

Optimism Amid Challenges

Despite these challenges, some industry observers remain optimistic about Meituan’s prospects. Hema Founder Hou Yi suggested that Meituan’s instant retail strategy in the fast-moving consumer goods (FMCG) sector could eventually surpass competitors like Tmall and JD.com. This perspective highlights Meituan’s potential to leverage its strengths in local services and entertainment to maintain a competitive edge.

Market Dynamics and Future Outlook

As Meituan navigates these challenges, the broader market dynamics continue to evolve. While some companies like UNITEDENERGY GP and ASCENTAGE have hit new highs, Meituan’s recent performance underscores the volatility and competitive pressures within the Consumer Discretionary sector. With a market capitalization of HKD 800.82 billion and a price-to-earnings ratio of 19.9, Meituan remains a significant player in the Internet & Catalog Retail industry, but its future will depend on its ability to adapt to market changes and strategic challenges.

In summary, Meituan’s recent stock performance and strategic developments reflect a complex interplay of market forces, competitive pressures, and internal strategic decisions. As the company continues to evolve, its ability to address these challenges will be crucial in determining its long-term success.