On December 6, Meituan’s closing price was HK$86.4. Judging from the historical curve, Meituan’s current stock price has almost returned to the level of 2019. Based on Meituan’s January share price high of US$195 and its latest closing price, Meituan’s market value has evaporated by approximately HK$670 billion this year. In 2020, Meituan's market value was once comparable to that of Industrial and Commercial Bank of China, but now it is only 40% of the latter.
Over the past few years, Meituan seems to have changed. Once upon a time, Meituan was a character without boundaries, attacking the previous generation of Internet companies; but in the face of the younger Pinduoduo and Douyin, after the offensive and defensive sides switched positions, Meituan also worked hard, but it seemed very laborious.
Take the community group buying business, which has the most intense market doubts, as an example. The operating loss of the innovative business segment in the third quarter was 5.11 billion. The main loss point of the innovative business was Meituan Selection, followed probably by Meituan Shopping.
Although losses in Meituan’s innovative business have narrowed, Pinduoduo’s community group buying has basically achieved breakeven. According to a report by the "Business Observer", more than half of the cities where Duoduo buys vegetables are already profitable, and a few cities are close to profitability. The overall losses are very small.
Meituan’s ability to kill everyone when facing Ctrip was not reflected when facing Pinduoduo. One view is that although Meituan’s annual active transaction users and user purchase frequency have reached record highs, it is really difficult for Meituan to beat Pinduoduo’s monthly and daily active users.
Although there are quite a lot of doubts in the market, Meituan is still relatively persistent at present. At the earnings call, Meituan’s management’s attitude was that they were trying to formulate improvement adjustment measures in the hope of promoting revenue growth and improving losses; they also proposed a time point: the operating losses of new businesses will be significantly narrowed in the next two years, and they will eventually achieve profitability in the long term.
Meituan is currently caught in a certain contradiction and dilemma: if it chooses to insist on investing in new businesses such as Meituan Select, the loss problem will be difficult to solve, which will continue to drag down overall profits; if it gives up or reduces investment in new businesses, it will not be able to meet the market's demand for Meituan to tell new stories. As Wang Xing said, Meituan Select is part of the company’s growth strategy.
Wang Xing believes that Meituan is undervalued by the market and its stock price only reflects the valuation of its food delivery business. Then Wang Xing and Meituan need to prove that the company can provide more growth curves; and under the long-term pressure from Pinduoduo and Douyin, Meituan must ensure that it can still compete.