While most of the world focuses on a volatile international trade war, two of the largest Internet companies in China causes greater damage to each other at home.
JD.com Inc. An expensive battle to steal the market share away from the leader of Meituan, while the latter was transgressing the previous e -commerce stronghold. The shares of the Hong Kong companies listed by about 30 % for each of the March levels, have eliminated $ 70 billion in the common market value.
Investors are preparing for a long conflict that would harm the husband’s profits. Analysts have reduced the price goals of both stocks, and defensive positioning has increased in the options market.
She added that both sides are worse in the short term, and it is not clear how long this battle will continue.
Although Donald Trump’s tariff was removed from the last gathering of technology, the impact of this local competition stands out. Meituan and JD.com is among the eight worst artists in the Hang Seng Tech index this year after they were both in the first half in 2024.
Switch came at a time when JD.com has published a strategy that burns money to promote JD Takeway Food, which was officially launched in February. The Beijing -based company has announced discounts of more than $ 1.4 billion for consumers, and commission fees provided to some traders and aims at this.Lease100,000 passengers full -time delivery.
JPMorgan Chase & Co. JD.com estimates with about 5 % of the food delivery market in China, which was previously divided by 75 % to Meituan and 25 % for Alibaba Holding Ltd. Mediation estimates that on a scale, JD Takeway can generate up to 18 billion yuan ($ 2.5 billion) in annual losses, giving 36 % of the father’s profit operating for 2025.
“We do not think this is a sustainable strategy due to the financial impact on the P & L” group. “It is easy for a participant to obtain a market share in the food delivery market in China through a deep growth strategy.”
Meituan has succeeded in implementing the food delivery competition in the past, but JD.com is seen as a huge competitor due to the current delivery network. Meanwhile, Meituan sorted this year in the field of rapid trade, computers and basic electronics for JD.com.
While both companies depend greatly on Chinese consumption, Meituan spendsstronglyWhen expanding the delivery of food abroad through the KETA application.
“JD does not have many growth opportunities in China, and it has very little exposure,” Felix Wang, President of Global Technology & Software said. In this context, her expensive invasion is JD Takeaway, a defensive step and “does not revolve around food delivery.”
Analysts on the sale side have turned into caution while continuing skirmishes. Although both stocks are purchased by an overwhelming majority, the average target price for Meituan decreased by 8 % of the highest levels in March, and JD.com has decreased about 4 %.
The costs of hedging against declines in both stocks are still much higher than their average year. For JD.com, the percentage of distinctive declining options has increased to its highest levels since August, as it ranked between the most deviant Hong Kong shares negatively.
This story was originally shown on Fortune.com
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