BABA(US:BABA) Zhong Guo Ji Jin Bao·2025-07-12 12:31Core Viewpoint - The recent escalation in the food delivery battle in China has led to significant promotional activities, including "0 yuan milk tea/coffee" offers, which have attracted widespread consumer attention and participation [2][3][5]. Group 1: Market Dynamics - Major food delivery platforms, including Meituan and Alibaba's Taobao Shanguo, have initiated large-scale subsidies to attract users, with promotions such as free drinks and substantial discounts [2][5]. - The competition has intensified since late June, with investment banks like Goldman Sachs and HSBC lowering Alibaba's target stock price by an average of 8% due to the ongoing fierce market rivalry [12]. - The battle is costly, with Nomura estimating that Alibaba, Meituan, and JD.com spent approximately $4 billion on various discounts in the second quarter alone [12]. Group 2: Financial Implications - Analysts predict that Alibaba's aggressive investment in food delivery and instant retail will significantly weaken its near-term profit expectations, leading to a 15% reduction in its target stock price [13]. - Goldman Sachs forecasts that Alibaba may incur losses of 41 billion yuan (approximately $5.7 billion) in its food delivery business over the next 12 months, which could represent about one-third of its net profit for the fiscal year ending in March [12]. Group 3: Competitive Landscape - The competition is expected to persist longer than anticipated, with major players currently in a stronger financial position and possessing more cash reserves [12]. - All platforms aim to become the "daily essential app" for users, and the subsidy war is unlikely to cool down until a balance is reached among the main competitors [12].