Wang, founder of Meituan, announced that the food delivery business’s loss will widen in the fourth quarter. While the market believes the intense industry competition has ended, future earnings forecasts are inevitably subject to significant downward revisions. As a result, institutions have successively lowered Meituan’s target price. On Monday (the 1st), Meituan’s stock once fell below the HK$100 mark in early trading and closed 1.5% at HK$101 at noon.
Morgan Stanley stated that with the narrowing loss in the instant retail business, coupled with the maintained advantages in market share and average order value, the impact of competition from Douyin and other platforms on the operating profit of the in-store business is expected to be offset. Meituan may have passed its worst period, showing initial signs of emerging from the trough.
Morgan Stanley: Meituan’s new business loss to further widen in Q4
Morgan Stanley noted that food delivery competition appears to have peaked in July and August, with further improvement after the “Double 11” shopping spree. The operating loss of the instant retail business is projected to narrow to RMB 15.6 billion in the fourth quarter, though the narrowing magnitude will be lower than that of Alibaba.
Regarding the new business segment, Morgan Stanley forecasts that Meituan’s loss will further expand to RMB 4.4 billion in Q4. Keeta (Meituan’s overseas food delivery brand) entered the Qatari market in August, Kuwait and the United Arab Emirates in September, and Brazil in October. Meanwhile, its Hong Kong business achieved break-even within 2.5 years of operation, ahead of the original plan. Morgan Stanley expects the Middle East market to reach break-even even faster. The full-year loss of the new business segment is estimated at approximately RMB 10 billion.
UBS: The management has confidence in the competitive advantage of Meituan
Morgan Stanley lowered its adjusted EBITDA forecasts for Meituan’s 2026 and 2027 fiscal years by 42% and 16% respectively. The revision reflects downward adjustments to core local commerce operating profit projections and increased overseas investments. The firm expects Meituan’s 2026 core local commerce operating profit to reach RMB 25 billion, with new business losses at RMB 9.8 billion. It also cut Meituan’s target price by 11.1% to HK$120 and reaffirmed an “Overweight” rating.
UBS stated that Meituan’s management is confident in the company’s power and competitive advantages. The firm also noted signs of a temporary easing in competition during the fourth quarter. After a year of lackluster stock performance, investors buying interest in Meituan have gradually picked up.
However, UBS emphasized that Meituan’s 2025 earnings forecasts need to be significantly lowered. This is due to declining average order value for food delivery users, reduced in-store profitability, and increased overseas investment costs. Even with easing industry competition, consumers have formed a low-price mindset, which will undermine profit potential. The firm expects a full recovery to take several years. As a result, UBS cut Meituan’s target price by 14% to HK$128 while maintaining a “Buy” rating.
Nomura: Food delivery competition has evolved into a protracted war
Nomura stated that competition in Meituan’s food delivery and in-store businesses will become the new normal. Given the challenging profit outlook, the firm downgraded Meituan’s rating from “Buy” to “Neutral” and cut its target price by 13% to HK$107.
Nomura believes that competition in the food delivery sector has evolved into a protracted war. While aggressive investments on the scale seen in the third quarter of this year are unlikely to recur, Alibaba has significantly narrowed the market share gap with Meituan. It is expected that Alibaba will shift its focus to high-average-order-value transactions and high-end customers in the future.
Citigroup also noted that as competition remains intense, operating losses in the core local business segment will persist in the fourth quarter. Food delivery losses will improve quarter-on-quarter, while instant retail and in-store businesses will show a sequential downward trend. Although Meituan’s management has reaffirmed the targets of reaching 100 million daily orders and restoring reasonable profitability, the actual room for growth in user numbers and profit margins remains highly dependent on competitors’ actions and strategies.