Meituan slides into loss in 'milk tea' subsidy war with instant commerce rival Alibaba

Core Insights - Meituan reported a significant quarterly loss due to intense competition with Alibaba, leading to modest revenue growth and eroded margins [1][3] Financial Performance - Revenue for the quarter reached 95.5 billion yuan (approximately US$13.3 billion), marking a 2% year-on-year increase but falling short of analysts' expectations of 97.5 billion yuan [1] - The company experienced an operating loss of 19.8 billion yuan, a stark contrast to the operating profit of 13.7 billion yuan reported in the same quarter last year [2] - Net loss amounted to 18.6 billion yuan, compared to a profit of 12.9 billion yuan in the previous year, exceeding analysts' predictions of a 14.8 billion yuan loss [3] Competitive Landscape - The loss is attributed to a price war with Alibaba, where Meituan has been heavily subsidizing products like milk tea and lunchboxes to attract consumers [3] - Meituan's core local-commerce segment, which includes food delivery and in-store business, saw a revenue decline of 2.8% to 67.4 billion yuan, with an operating loss of 14.1 billion yuan due to intensified competition [6] - The new initiatives division, covering grocery retail and the overseas delivery service Keeta, reported a revenue increase of 15.9% to 28 billion yuan, although its operating loss widened by 24.5% to 1.3 billion yuan [7] Market Outlook - The company indicated that profit pressure is expected to continue in the short term, with ongoing heated market competition likely to result in persistent operating losses into the fourth quarter [5]