Meituan shares tumbled the most in more than a year after the Chinese company warned that growth in its main meal delivery business would slow this quarter and spending on promotions rise.
“The pace of loss narrowing for community group purchase is below investor expectations so far,” JPMorgan analyst Alex Yao wrote. “The outlook is unclear despite Chairman and CEO Wang Xing’s assurance of ‘significant loss narrowing in the future.’”
Strong travel demand helped the food delivery giant defy slowing growth for its core business. Sales rose 22% to 76.5 billion yuan ($10.7 billion) in the quarter ended September, compared to an average projection for 76.01 billion yuan. Net income almost tripled to 3.59 billion yuan, but margins slid because of promotions.
Meituan’s steeper-than-expected in-store, hotel and travel operating profit fall reflects heightened spending on promotions within this sector, particularly via live streaming and AI tools which the firm disclosed on Nov. 28.
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