Shares of Meituan, China’s leading food delivery platform, dropped over 5% following CEO Wang Xing’s warning of a slowdown in food delivery during the next quarter. While Meituan posted strong second-quarter results with increased revenue and a profit, Wang cited short-term headwinds due to extreme weather conditions and the recovery of offline consumption. The recent heavy rains and flooding in Beijing, Tianjin, and other provinces impacted the food delivery industry. Wang expressed confidence in the long-term growth of Meituan’s food delivery business and highlighted the company’s plans to deploy autonomous delivery vehicles.
Meituan holds nearly 70% of China’s food delivery market share and also provides various other services such as ride-hailing, on-demand delivery, and hotel and travel booking. Xiaolin Chen, head of international at KraneShares, expressed optimism about Meituan’s market position and set a price target with a 35.2% upside. Wang stated that the recovery of the economy and increased dining out could lead to lower demand for food delivery, but Meituan will continue implementing strategies to capture demand and stimulate recovery. The company is also exploring the use of artificial intelligence and autonomous delivery to improve efficiency and service for its clients.
Despite the short-term challenges caused by extreme weather conditions, Meituan remains confident in its long-term growth and aims to leverage technology to enhance its operations. Additionally, Meituan has expanded its presence outside of mainland China, including launching a sister app in Hong Kong.