While much of the world focuses on volatile international trade wars, two of China’s biggest internet companies are causing great damage to each other at home.
JD.com Inc. has launched a costly fight to steal market share from food delivery leader Meituan, but the latter has invaded the former e-commerce hub. The company’s Hong Kong listed stocks fell approximately 30% from their March highs, bringing a total market value of around $70 billion.
Investors are blessed with long struggles that hurt the pair’s earnings. Analysts have lowered price targets for both stocks, increasing defensive positioning in the options market.
Daisy Li, fund manager at EFG Asset Management Hk Ltd., said: “Both sides have been getting worse in the short term and it’s unclear how long this fight will last,” she added.
The impact of this domestic rivalry stands out, despite Donald Trump’s tariffs removing steam from recent Chinese technology rally. Meituan and JD.com rank among the worst eight performers on the Hang Seng Tech index this year after being in the upper half of 2024.
The switch came when JD.com deployed a cache burning strategy to promote the officially launched JD Takeaway Food Platform in February. The Beijing-based company has announced more than $1.4 billion discounts for consumers.hire100,000 full-time delivery riders.
JPMorgan Chase & Co. estimates that JD.com has accounted for about 5% of the Chinese food delivery market. At its current size, the brokerage estimates that JD takeout can generate up to 18 billion yuan ($2.5 billion) in annual losses, wiping out 36% of parent operating profit in 2025.
“Due to the financial impact on Group P&L, I don’t think this is a sustainable strategy,” analyst Alex Yao wrote in a memo on Tuesday. “It is cost-free for new entrants to gain significant market share in the Chinese food supply market through a deeply subsidized growth strategy.”
Meituan has intermittently competed in food delivery in the past, but JD.com is considered a horrifying challenger given its existing distribution network. At the same time, Meituan has invaded JD.com’s core quick commerce field, computers and electronics products this year.
Both companies rely heavily on Chinese consumption, but Meituan spendsactivelyExpansion to overseas food distribution through the Keeta app.
“JD does not have many growth opportunities left in China and there is little exposure to overseas,” said Felix Wang, Head of Global Technology & Software at Hedgeye Risk Management. In this regard, its costly JD takeout advance is a more defensive move, “not entirely about food delivery.”
Sellside analysts have become more cautious as skirmishes dragged on. Both stocks are overwhelmingly rated, but Meituan’s average price target is down 8% from its March high, with JD.com immersing around 4%.
The cost of hedging against both stock declines is well above the yearly average. For JD.com, the ratio of outstanding bearish to vulnerable options has skyrocketed to the highest level since August, ranking among the most negatively skewed Hong Kong stocks.
This story was originally featured on Fortune.com.
