This Meituan stock analysis examines one of the most dramatic collapses in Chinese internet equities during 2025. Meituan (03690.HK), the dominant on-demand services platform in China, has experienced a 55% drawdown from its 52-week high of HKD 189.60 to the current price of HKD 85.45. Our proprietary Wealth Preservation framework assigns a score of just 38 out of 100, triggering an automatic AVOID recommendation. This institutional equity research note dissects the fundamental drivers behind the decline, the probability-weighted return profile, and why capital allocators focused on wealth preservation should remain on the sidelines — for now.
Table of Contents
- Executive Summary
- Company Overview and Business Model
- The 2025 Subsidy War: Anatomy of a Competitive Reset
- Financial Fortress Assessment
- Meituan Stock Analysis: Valuation Framework
- Scenario Analysis and Probability-Weighted Returns
- Risk Matrix: 6 Factors That Disqualify This Position
- Management Quality and Capital Allocation
- Peer Comparison: Where Meituan Ranks Among Chinese Internet Giants
- Monitoring Triggers: What Would Change Our Assessment
- Conclusion and Final Recommendation
- Execution Infrastructure
- Risk Disclaimer
Executive Summary
BOTTOM LINE UP FRONT
Recommendation: AVOID Current Price: HKD 85.45 | Fair Value (Base Case): HKD 110–130 Probability-Weighted Return: ~9.0% CAGR — but with unacceptable downside dispersion Wealth Preservation Score: 38/100 — FAILS 3 of 5 absolute requirements The Risk: A 30% probability of permanent capital loss in the bear case, zero dividend income, and VIE structural exposure make this position incompatible with preservation mandates.
Meituan commands approximately 60–70% of China’s food delivery market by GMV on orders above RMB 30, connects over 770 million annual transacting users with 14.5 million active merchants, and generated RMB 337.6 billion in revenue during FY2024. The business quality, in isolation, is exceptional. Three-sided network effects, AI-driven logistics processing over 100 million daily deliveries, and a rapidly expanding instant retail segment worth RMB 270 billion in annual GMV represent a formidable competitive position.
The problem is not the business. The problem is what happened in 2025.
JD.com entered food delivery in February 2025. Alibaba rebranded Ele.me as Taobao Flash Delivery and committed RMB 50 billion in subsidies. The resulting price war produced a record RMB 18.6 billion net loss in Q3 2025 versus RMB 12.9 billion profit in Q3 2024. Operating cash flow collapsed to negative RMB 22.1 billion. Selling and marketing expenses nearly doubled to RMB 34.3 billion, representing 35.9% of quarterly revenue.
This Meituan stock analysis concludes that while the long-term thesis around on-demand commerce remains structurally compelling, the current risk profile — zero dividends, negative ROIC, 20–30% probability of greater than 50% permanent capital loss, and VIE structural exposure — disqualifies this position from any wealth preservation allocation.
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Company Overview and Business Model
Meituan operates China’s leading technology-driven local services platform across two core segments.
Core Local Commerce (CLC) accounts for approximately 74% of total revenue and encompasses food delivery, Meituan Instashopping (instant retail and quick commerce), in-store dining reservations, hotel bookings, and travel services. This segment represents the economic engine of the enterprise and the battlefield where the 2025 subsidy war has been fought.
New Initiatives includes Meituan Select (community group buying), Xiaoxiang Supermarket (dark store first-party grocery), Keeta (international food delivery expanding into Hong Kong, Saudi Arabia, the GCC, and Brazil), bike and e-moped sharing, power bank rental, and emerging AI and cloud services.
Revenue generation follows a commission-based platform model supplemented by delivery service fees, online marketing services, and an expanding first-party retail operation. The company processed over 100 million daily delivery orders at peak through its proprietary logistics network, supported by approximately 30,000 flash warehouses and millions of delivery riders.
The competitive moat assessment reveals genuine structural advantages. Network effects score 8/10 — three-sided dynamics between 770 million users, 14.5 million merchants, and millions of riders create substantial barriers. Scale advantages score 7/10 — the largest delivery fleet in China with extensive warehouse infrastructure. The data moat scores 8/10 — unmatched delivery logistics and consumer behavior datasets power AI-driven route optimization that saves approximately USD 230 million annually in operational costs.
However, this Meituan stock analysis must acknowledge a critical moat vulnerability. The 2025 subsidy war demonstrated that even formidable network effects can be degraded when well-capitalized competitors commit billions in subsidies. Meituan’s order volume market share reportedly declined from approximately 70% to 45–52%, though management disputes this by referencing GMV share on orders above RMB 30, where they claim retention above 70%.
Moat Durability Rating: 7/10 — ELEVATED threat from active competitive assault
The 2025 Subsidy War: Anatomy of a Competitive Reset
The competitive dynamics that defined 2025 represent the central variable in any Meituan stock analysis conducted today.
In February 2025, JD.com launched its food delivery service, leveraging its existing logistics infrastructure and massive user base. Simultaneously, Alibaba rebranded Ele.me as Taobao Flash Delivery and publicly committed RMB 50 billion in competitive subsidies. The strategic logic was clear — both competitors identified food delivery as a customer acquisition channel for their broader ecosystems rather than a standalone profit center.
The financial impact on Meituan was immediate and severe. Q3 2025 figures tell the story with brutal clarity. Revenue grew a modest 2% year-over-year to approximately RMB 95.5 billion, but selling and marketing expenses exploded from RMB 17.8 billion to RMB 34.3 billion — a 93% increase. Operating income swung from positive RMB 13.2 billion to deeply negative territory. The net loss of RMB 18.6 billion represented a RMB 31.5 billion deterioration from the prior year’s Q3 profit.
The trailing twelve-month picture is equally concerning for this Meituan stock analysis. TTM ROIC has deteriorated to negative 1.3%, compared to positive 10.2% in FY2024. Gross margins compressed from 38.4% in FY2024 to approximately 33.5% on a TTM basis. Free cash flow, which reached RMB 46.1 billion in FY2024, has collapsed to approximately RMB 4.8 billion on a TTM basis.
Management has signaled that competitive intensity peaked in Q3 2025 and that October and November data showed competitors beginning to reduce subsidies, with Meituan’s market share rebounding. However, the duration and terminal state of this competitive reset remain the single largest uncertainty factor. Our base case assumes normalization by H2 2026. Our bear case assumes the war extends through 2027.
Financial Fortress Assessment
Despite the operational devastation, Meituan’s balance sheet provides meaningful survivability cushion.
The company held RMB 141.3 billion in cash and short-term investments as of September 2025, against total debt of RMB 55.8 billion — yielding net cash of approximately RMB 85.5 billion. The debt-to-equity ratio stands at a conservative 0.32x, well below our 1.0x threshold. Interest coverage based on FY2024 EBIT was approximately 735x, and the current ratio sits at 1.71x.
Under normal conditions, this balance sheet would receive a FORTRESS designation. However, the active cash burn from the subsidy war fundamentally alters the assessment. At Q3 2025 burn rates (negative RMB 22.1 billion in operating cash flow for a single quarter), the company could consume its entire net cash position within 4–5 quarters. This transforms a seemingly impregnable fortress into a time-limited asset that depends entirely on competitive normalization.
Solvency Verdict: ADEQUATE (conditional on subsidy war resolution within 12–18 months)
The profitability trajectory illustrates the core problem for any Meituan stock analysis focused on wealth preservation — and indeed for any equity research methodology that prioritizes downside protection. FY2024 represented peak profitability — 10.1% operating margin, 23.8% ROE, and strong ROIC above WACC. The 2025 competitive reset has completely reversed this progress. Current ROIC of negative 1.3% against an estimated WACC of 9–10% means the business is actively destroying economic value at present.
Earnings quality, when the business is profitable, remains excellent. FY2024 operating cash flow represented 160% of net income, indicating superior cash conversion. The current losses are operational in nature — driven by competitive spending rather than accounting irregularities — which provides some comfort that profitability can recover once competitive conditions normalize.
Meituan Stock Analysis: Valuation Framework
On traditional metrics, Meituan appears extraordinarily cheap relative to its own history. At HKD 85.45, the stock trades at approximately 1.3x trailing twelve-month sales versus a five-year average of roughly 5x. The EV/Revenue multiple of approximately 1.1x sits near historical lows. Price-to-book of 2.7x compares to a five-year average of approximately 5x.
This apparent deep value is misleading for three reasons that any rigorous Meituan stock analysis must address.
First, the company is currently loss-making, rendering P/E meaningless on a TTM basis. Second, the profitability achieved in FY2024 may not be fully recoverable if competitive dynamics have permanently shifted the margin structure. Third, applying historical multiples to an uncertain future earnings base produces an impractically wide range of fair values.
Our normalized fair value approach assumes competitive normalization by H2 2026 and a return to 6–8% operating margins (below the FY2024 peak of 10.1% but reflecting structurally lower pricing power post-war). Under these assumptions, normalized EPS would be approximately HKD 4.50–6.00. Applying a conservative 18–22x P/E multiple (reflecting the China technology platform discount and residual competitive uncertainty), fair value ranges from HKD 81 to HKD 132.
The current price of HKD 85.45 sits near the low end of this range, suggesting limited margin of safety even under base case assumptions.
Valuation Verdict: INDETERMINATE — Optically cheap on backward metrics, but the path to normalized profitability carries excessive uncertainty for wealth preservation capital.
Scenario Analysis and Probability-Weighted Returns
Our Meituan stock analysis employs three-scenario probability weighting to capture the wide range of potential outcomes. Each scenario reflects a distinct competitive trajectory with materially different implications for long-term capital preservation.
Bear Case (30% Probability) — Prolonged Price War and Margin Reset
The subsidy war continues through 2026–2027 as Alibaba and JD.com sustain competitive aggression. Meituan’s market share permanently resets to 50–55% from approximately 70%. Operating margins stabilize at 3–5%, representing half of FY2024 levels. International expansion through Keeta continues burning cash without meaningful contribution. Regulatory tightening on rider costs and merchant fees further compresses margins.
Bear Case 10-Year Price Target: HKD 50–75 | Total Return CAGR: -5% to -1%
Base Case (45% Probability) — Competitive Normalization by H2 2026
The subsidy war abates by mid-2026 as rivals’ return-on-investment calculus deteriorates. Meituan retains approximately 60% GMV share in food delivery and builds a dominant instant retail position. Operating margins recover to 6–8%. AI logistics and scale drive efficiency improvements. Multiple normalizes to 18–22x reflecting platform leadership with competitive scars.
Base Case 10-Year Price Target: HKD 180–260 | Total Return CAGR: 8–12%
Bull Case (25% Probability) — Market Leadership Strengthened
The subsidy war ends quickly in Q1 2026, and rivals retreat. Meituan’s AI and logistics moat prove insurmountable at scale. Instant retail grows to an RMB 1 trillion-plus addressable market. International expansion succeeds in three or more markets. Operating margins expand to 10–12%, and the multiple re-rates to 25–30x.
Bull Case 10-Year Price Target: HKD 350–550 | Total Return CAGR: 18–25%
Probability-Weighted Expected Return
The composite calculation yields an expected return of approximately 9.0% CAGR. This headline figure appears adequate for most mandates. However, the dispersion — ranging from negative 3% to positive 21.5% — reveals a speculative profile fundamentally incompatible with wealth preservation objectives. Our framework requires bear case returns to be positive. Meituan fails this absolute requirement.
The probability of permanent capital loss exceeding 50% stands at 20–30%, well above our 10% maximum threshold.
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Risk Matrix: 6 Factors That Disqualify This Position
This Meituan stock analysis identifies six distinct risk categories that collectively disqualify the position from wealth preservation allocation.
Any comprehensive Meituan stock analysis must weigh these risks carefully against the potential upside.
Earnings Volatility (9/10): The swing from RMB 12.9 billion quarterly profit to RMB 18.6 billion quarterly loss — a RMB 31.5 billion deterioration — represents one of the most dramatic profitability reversals in Chinese internet history. This level of earnings instability makes forward projections unreliable.
Competitive Threat (9/10): JD.com and Alibaba possess the financial resources to sustain subsidies for extended periods. Both view food delivery as a strategic customer acquisition channel rather than a profit center, fundamentally altering the competitive calculus. While Meituan’s scale and AI moat provide structural advantages, the 2025 experience demonstrates these advantages have limits.
Regulatory Risk (8/10): China’s technology platform regulatory environment remains unpredictable. Antitrust enforcement actions, rider welfare mandates requiring higher compensation, and merchant fee regulations all represent ongoing headwinds. The regulatory trajectory has been marginally positive in 2024–2025 relative to the 2021 crackdown, but structural uncertainty persists.
Geopolitical and VIE Risk (8/10): Meituan is listed in Hong Kong through a Cayman Islands holding company connected to Chinese operating entities via Variable Interest Entity contracts. Foreign investors do not hold equity in the operating businesses directly. This structure has never been formally approved by Chinese authorities and theoretically could be invalidated, resulting in total loss of investment. For wealth preservation mandates focused on limiting permanent capital loss, VIE risk adds a non-quantifiable tail risk.
Balance Sheet Deterioration Risk (3/10): While the current balance sheet is strong, the active cash burn rate introduces time-dependent solvency risk. The RMB 141.3 billion cash buffer provides approximately 4–5 quarters of runway at Q3 2025 burn rates.
Zero Dividend Income (Automatic Disqualifier): Meituan has never paid a dividend and has no announced plans to initiate one. This represents a fundamental incompatibility with our framework, which relies on dividend income as a critical component of total return and downside protection.
Management Quality and Capital Allocation
Founder-CEO Wang Xing holds approximately 516 million shares representing an 8.4% economic interest valued at roughly USD 47 billion. This level of alignment — where the overwhelming majority of the CEO’s personal net worth is concentrated in Meituan — provides genuine confidence in management motivation.
Wang Xing founded the company in 2010, built it from zero to approximately USD 67 billion in market capitalization, and has navigated multiple existential competitive threats. His competitive instincts and strategic vision have been repeatedly validated. The management team’s response to the 2025 subsidy war — matching competitor spending while maintaining user engagement at record highs — reflects rational competitive strategy, even if the financial consequences are painful.
Management Quality: GOOD — Proven founder-operator with exceptional alignment
Capital allocation, however, skews heavily toward growth and competitive defense over shareholder returns. Despite generating RMB 46.1 billion in free cash flow during FY2024, no dividend was initiated. Share buybacks were active in 2024 (approximately 4.2% of outstanding shares repurchased) but have likely been suspended given 2025 losses. The Dingdong Fresh acquisition in 2025 was strategically logical but remains unproven.
Capital Allocation Track Record: MIXED — Excellent cash generation when conditions allow, but profits are reinvested rather than distributed. Misaligned with wealth preservation objectives.
Peer Comparison: Where Meituan Ranks Among Chinese Internet Giants
This dimension of our Meituan stock analysis reveals that even among Chinese peers, the risk-reward profile is suboptimal for preservation mandates.
Among major Chinese internet platforms, none qualify as ideal wealth preservation candidates due to shared structural risks including VIE exposure, regulatory uncertainty, and competitive intensity.
JD.com (9618.HK) offers the best dividend yield at approximately 2.5% and the lowest price-to-sales ratio at roughly 0.25x. Alibaba (9988.HK) has begun paying dividends at approximately 1.5% yield and provides broader business diversification. PDD Holdings delivers the strongest fundamental metrics with ROIC exceeding 30% and FCF margins above 25%, though it pays no dividend.
Meituan ranks poorly within this peer group due to zero dividends, current operating losses, and the most intense direct competitive pressure among the cohort. If capital deployment to a Chinese internet platform were mandatory, Alibaba or JD.com would represent more suitable options for preservation-oriented mandates — though neither would score above 50 on our Wealth Preservation framework.
Monitoring Triggers: What Would Change Our Assessment
While Meituan currently fails our wealth preservation criteria, it remains a high-quality business facing what may prove to be temporary competitive headwinds. We would reconsider the AVOID recommendation under the following conditions.
Subsidy war resolution with operating margins normalizing above 6% would fundamentally improve the bear case return profile and the probability-weighted expected return. Current assessment: moderate likelihood within 12–18 months.
Dividend initiation above 1.5% yield would address the income reliability gap that currently represents an automatic disqualifier. Current assessment: low probability within 2–3 years.
Stock decline to HKD 50–60 with improving fundamentals would create sufficient valuation margin of safety to compensate for structural risks. Current assessment: possible if the competitive war extends into 2027.
VIE regulatory clarity or domestic A-share listing would remove the structural tail risk that reduces our maximum conviction level. Current assessment: low-to-moderate probability, ongoing.
Four consecutive quarters of positive FCF and ROIC above WACC would demonstrate earnings durability post-competitive reset. Current assessment: earliest possible H2 2026.
The next critical data point arrives with Q4 2025 earnings, expected in March 2026. This report will provide essential visibility into the loss trajectory and competitive dynamics heading into the new fiscal year.
Conclusion and Final Recommendation
This Meituan stock analysis reaches a clear conclusion: AVOID — do not initiate a position.
Three of five absolute requirements under our Wealth Preservation framework are failed. The bear case total return is negative. No dividend exists or is expected in the near term. The probability of permanent capital loss exceeding 50% stands at 20–30%, double our maximum threshold.
The probability-weighted return of approximately 9% CAGR appears adequate in isolation, but this masks unacceptable downside dispersion. In the bear case, HKD 100 invested becomes HKD 74 over ten years — a 26% permanent capital loss. For wealth preservation mandates, the certainty of a 4% high-yield savings account return is vastly preferable to a 30% probability of material capital impairment, regardless of the upside potential.
Meituan belongs on the watchlist, not in the portfolio. When the competitive landscape clarifies, margins normalize, and — ideally — a dividend program is initiated, this Meituan stock analysis will be revisited. Until then, capital preservation demands discipline over speculation.
This Meituan stock analysis will be updated following Q4 2025 earnings in March 2026.
Wealth Preservation Score: 38/100 | Recommendation: AVOID | Position Size: HKD 0
Execution Infrastructure
For the execution of equity research theses across international markets, Moschovakis Capital utilizes the following institutional-grade platforms selected for regulatory compliance, execution quality, and multi-market access.
Primary Execution: Interactive Brokers — Selected for institutional-grade liquidity, access to Hong Kong-listed securities including 03690.HK, competitive commission structures, and comprehensive regulatory compliance across European and Asian jurisdictions.
Secondary Platform: eToro — Utilized for portfolio monitoring, social sentiment analysis on Chinese technology equities, and secondary execution capabilities meeting European regulatory standards.
Banking Infrastructure: Revolut — Deployed for multi-currency management essential when operating across HKD, RMB, EUR, and USD denominated positions, with institutional-grade FX execution.
Digital Asset Infrastructure: Binance — Maintained for blockchain-based settlement monitoring and digital asset diversification where mandated by allocation framework.
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Risk Disclaimer
This Meituan stock analysis is published by Moschovakis Capital for informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. The analyst does not hold a position in the securities discussed. Readers should conduct their own due diligence and consult with qualified financial advisors before making investment decisions. This Meituan stock analysis utilizes data from company filings, Meituan Investor Relations, Yahoo Finance, StockAnalysis.com, Investing.com, Simply Wall St, Momentum Works, TechNode, and Reuters. Report date: February 12, 2026.
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