The Price of Competition: How Meituan's Wang Xing Lost $1.1 Billion in Market Value During Subsidy War

Meituan founder and CEO Wang Xing experienced a significant wealth contraction Thursday morning when the company’s Hong Kong-traded shares dropped 11.3%, erasing approximately $1.1 billion from his estimated $9 billion fortune. The sharp decline followed the previous day’s announcement that the food delivery giant’s second-quarter profit collapsed 97% year-over-year despite revenue climbing 11.7% to 91.8 billion yuan.

The numbers tell a cautionary tale about the intensifying competitive battlefield in Chinese food delivery. While Meituan’s top-line growth remained solid at 91.8 billion yuan for the quarter ending in June, net earnings plummeted to just 365.3 million yuan ($51.1 million)—a stark illustration of how aggressive market spending erodes profitability.

The Subsidy War’s Mounting Toll

At the heart of Meituan’s earnings squeeze lies an escalating subsidy competition. E-commerce powerhouses Alibaba and JD.com have dramatically ramped up their food-delivery investments to capture market share and new users, forcing Meituan into a constant defensive spending posture. Industry analysts estimate that the three companies collectively hemorrhage approximately 2 billion yuan quarterly on customer meal coupons and platform subsidies.

During an analyst briefing, Wang Xing acknowledged the competitive intensity while pledging that Meituan would hold its ground. Chief Financial Officer Chen Shaohui warned that the company’s core local commerce segment would face “substantial” losses this quarter due to strategic spending requirements—a euphemism for the mounting costs of staying competitive.

How Long Will This Battle Last?

Market observers are divided on the duration of this cutthroat competition. Some analysts believe the pricing war could persist through the remainder of the year as all three platforms vie for user acquisition. However, others predict that if competitors pivot toward AI investments and other emerging opportunities, the subsidy intensity might finally ease in early 2025.

The more pessimistic camp sees no near-term relief. At least 12 more months of grueling competition appears inevitable, particularly as Meituan simultaneously manages ambitious international expansion of its Keeta overseas service. The company has already established significant footholds in Hong Kong—where it replaced a major competitor following their regional exit—and expanded to 20 cities across Saudi Arabia by late July.

The International Factor

Wang Xing’s overseas ambitions add another layer of financial pressure. Meituan’s international food-delivery operations require substantial upfront capital investment with profitability timelines stretching 12 to 24 months into the future. This dual burden—defending domestic turf while expanding abroad—creates a particularly challenging margin environment for the 46-year-old billionaire executive.

The takeaway is clear: Meituan faces an uncertain profitability trajectory as long as rivals continue pouring resources into China’s competitive food-delivery ecosystem.