When much of the world is focused on the volatile International Trade War, the two largest internet companies in China will cause greater damage at home.
JD.com Inc. has triggered a costly battle to steal market share from Meituan, a food delivery manager, whereas the latter has invaded the former e-commerce fortress. Hong Kong's list of companies has fallen by about 30%from the peaks of March, reducing the market value of around $ 70 billion.
Investors are pursuing a long -term fight that damages the couple's profits. Analysts have reduced the price target of both shares and positioning is protected in the market.
“Both sides are worse in the near future and it is not clear how long this battle will last,” said Daisy Li, Fund Manager at EFG Asset Management HK LTD. The intense level of competition in the Chinese food market is impaired by profitability, he added.
Even though Donald Trump's tariffs have taken out the steam from the recent China Tech rally, the effect of this domestic rival is noticeable. Meituan and JD.com will be among the eight worst performers of the Hang Seng Tech Index this year after both were on the best side in 2024.
The switch arrived when JD.com used a money -burning strategy to promote its JD Takeaway food platform, which was officially launched in February. The company in Beijing has announced over $ 1.4 billion discounts to consumers, waving commissions for some merchants and its purpose isrent100,000 full -time passengers.
JPMorgan Chase & Co estimates that JD.com has taken about 5% of the Chinese food delivery market, which had previously been divided into Meitan and Alibaba Group Holding Ltd. Ele.me. According to the broker, JD Takeaway could earn up to 18 billion yuan ($ 2.5 billion) on a current scale, wiping 36% of its parent's operating profit in 2025.
“We do not think this is a sustainable strategy because the P&1 group has the financial impact,” Analyst Alex Yao wrote in a note on Tuesday. “The new participant has a significant market share to disable costs in the Chinese food delivery market through a deep subsidized growth strategy.”
Meitu has successfully taken the food delivery competition in the past, but JD.com is considered a huge challenge, taking into account the existing delivery network. At the same time, Meituan made JD.com the main spacious trade field, computer and electronics, this year.
If both companies are largely dependent on China's consumption, the Meituan has spentaggressivelyWhen expanding abroad, food is cooked through the application.
“The JD has no growth in China and has very little contact,” said Felix Wang, Hedgeye Risk Management Manager and Software Manager. In this context, it is more expensive to take a protective step and “not completely food delivery”.
Sales analysts have become more cautious when the blow drags. Although both shares have been overwhelmingly purchased, the average price purpose for the Meitan is 8% compared to the highest in March and JD.com has fallen by about 4%.
The costs of grounding against the downturn in both shares are far from one year of average. For JD.com, the ratio of outstanding Bearish-empty opportunities has risen to the highest level since August, ahead of Hong Kong's most negative.
This story was originally reflected Fortune.com
