Meituan share price has imploded: will it recover or fall further?

Meituan share price imploded today, Aug. 28, reaching its lowest level since September last year. This crash was a continuation of a downtrend that started in October last year, when it peaked at $217. It has now plunged by 52% to the current $103. 

Meituan share price crashes as pricing war continues

Meituan’s stock price plunged to its lowest level in months after the company’s results showed that its profit nosedived in the second quarter of this year.

Its revenue jumped by 11% to RMB 91.8 billion, continuing a trend that has been going on for years as demand for food and grocery deliveries jumped. Revenue also rose as the company boosted its marketing and incentives.

However, the company’s profits were almost wiped out. Its profit for the period slumped to RMB 365 million, down by 96.8% from what it made in the same period last year.

Meituan’s main issue has been the rising competition in the country, especially from JD, which launched a similar service recently. 

JD has embarked on a major expansion spree in the country by offering substantial discounts in a bid to capture market share. Most analysts and executives believe that these discounts, including those by Alibaba’s Ele.me,  are not sustainable. In a statement, Meituan said:

“Due to the irrational competition which started this quarter, operating profit decreased by 75.6% year over year to RMB3.7 billion, and operating margin decreased by 19.4 percentage points year over year to 5.7%.”

Most notably, Chinese officials have intervened to reduce the downward spiral at a time when the country is battling with deflation. They also mandated these companies to improve the living conditions of their couriers. 

In a statement, Meituan said that it has now expanded its occupational injury insurance coverage to all couriers. It is also offering summer heat subsidies and expanded its critical illness fund. While good, all these activities are expensive and affecting its profitability.

Will the Meituan stock recover?

Meituan share price has plunged in the past few months, and chances are that the downtrend will continue for a while. It is unlikely that its profit situation in China will improve in light of the current profitability issues. 

On the positive side, Meituan is making an effort to boost its growth. For example, the Instashopping platform is seeing strong demand as the number of InstMarts has jumped to over 50,000. It is also gaining market share in the in-store, hotel, and travel businesses.

Most importantly, Meituan is also expanding its business in the international markets through its Keeta product. The challenge is that even these markets are highly competitive. 

The most likely scenario is where the Meituan share price remains under pressure for a while and then rebound, possibly in 2026 as the situation stabilizes.

Meituan stock price analysis

The daily chart shows that the Meituan share price has plunged in the past few months. It has moved from a high of $216 in October to $102 today. The recent plunge happened as it formed a descending triangle pattern. 

Meituan stock has remained below the 50-day and 100-day moving averages. Also, the Relative Strength Index (RSI) has moved below the oversold level, while the percentage price oscillator (PPO) has moved below the zero line. 

Therefore, the stock will continue falling as sellers target the support at $95. The alternative scenario is where it rebounds and retests the resistance at $115 and then resumes the downtrend.

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