Meituan Posts US$3.5B Loss as China Delivery War Intensifies
Meituan's 23.3 billion yuan loss signals a turning point for Asian tech profitability. As JD.com and Alibaba's subsidy wars erode margins, CMOs must reassess China's competitive landscape and consu...
Chinese food delivery giant Meituan warned investors on February 14, 2026 that its 2025 net loss reached 23.3 to 24.3 billion yuan (approximately US$3.5 billion), reversing a 35.8 billion yuan profit from 2024 in what represents the most dramatic shareholder value destruction in Asian tech history.
Three-Way Competition Triggers Subsidy War
The catastrophic swing stems from a subsidy war that consumed over 100 billion yuan (~US$14 billion) across China's delivery platforms in 2025. JD.com's February 2025 market entry and Alibaba's 50 billion yuan Taobao Instant Commerce program launched in July transformed the market from a stable duopoly into a three-way battle.
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Meituan's market share eroded to 55 to 58% as Taobao captured 35 to 37% and JD.com secured five to eight percent. The company's core local commerce segment, which generated 52.4 billion yuan in profit during 2024, swung to a 6.8 to seven billion yuan loss in 2025.
The competitive intensity accelerated throughout the year. Meituan's second quarter 2025 net profit plunged 96.8% to just 365 million yuan. By the third quarter, the company posted its first quarterly loss since 2023, recording an 18.6 billion yuan deficit.
Investor Flight and Regulatory Intervention
Equity markets punished the subsidy warfare severely. Meituan shares fell over 30% in 2025, hitting a low of HK$84.30 (~US$10.78) after Moody's assigned a negative outlook in early 2026.
"A recovery in Meituan's food delivery business appears increasingly uncertain," said Ying Wang, Senior Analyst at Moody's. "Intense competition is likely to continue pressuring margins and increase investment requirements."
China's State Administration for Market Regulation (SAMR) intervened twice, summoning executives in May and July 2025 to implement new rules curbing "irrational competition" through excessive subsidies. Despite regulatory pressure, losses persisted into the first quarter of 2026, demonstrating the difficulty of reversing momentum once price wars escalate.
J.P. Morgan analysts noted that "investor focus has shifted to short-term earnings risks" from competition, though acknowledged that "regulatory intervention could curb irrational competition, mitigating some downside risks."
Broader Pattern of Value Destruction
The Meituan collapse exemplifies what Chinese leadership has termed "disorderly low-price competition" that harms innovation, efficiency, and industrial upgrading. The phenomenon, called "involution" in China, involves zero-sum price undercutting and duplicative investments that erode overall industry value.
Historical precedents include China's 1996 television price war, where Changhong slashed prices eight to 18%, bankrupting state-owned rivals like Panda and SVA while destroying industry profitability. More recently, Meituan received a US$530 million fine in October 2021 for anticompetitive practices that forced restaurants to choose exclusively between platforms.
Research shows 41% of merger buyers and 63% of divestitures in Asia-Pacific underperform peers or destroy value due to execution risks worsened by regulatory scrutiny and growth-focused strategies that prioritize volume over sustainable capabilities.
The subsidy war has squeezed merchant profits, created operational chaos, and triggered investor flight across the sector. Whether regulatory intervention can stabilize the market before further value destruction remains uncertain as the three-way competition continues into 2026.
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