Meituan slides into loss in ‘milk tea’ subsidy war with instant commerce rival Alibaba
Hefty subsidies on milk tea and lunchboxes drive Meituan from profit to loss, underscoring the ferocity of the war to reshape food delivery
China’s food-delivery giant Meituan swung to a deep quarterly loss, as a costly battle with Alibaba Group Holding’s instant commerce business eroded margins and kept revenue growth modest.
The Beijing-based company on Friday reported revenue of 95.5 billion yuan (US$13.3 billion) for the three months to September, up 2 per cent year on year, missing analysts' estimates of 97.5 billion yuan.
However, it booked an operating loss of 19.8 billion yuan, compared with a 13.7 billion yuan operating profit a year earlier.
Net loss reached 18.6 billion yuan, versus a 12.9 billion yuan profit in the same period last year, which was wider than the 14.8 billion yuan loss expected by analysts.
Alibaba’s net income attributable to ordinary shareholders in the same quarter fell 52 per cent to 21 billion yuan from 43.9 billion yuan a year ago. Alibaba owns the South China Morning Post.