Data as of September 11, 2026. Meituan is one of China’s most important internet businesses and one of the hardest to value. Consumers use it for food delivery, instant retail, hotels, local services and a growing range of everyday transactions. The platform is ubiquitous. The stock, however, trades as though ubiquity alone is not enough.
That skepticism is understandable. Meituan operates in a market where competitors can erase years of margin progress simply by deciding to subsidize the same customer. Yet the second quarter showed why the underlying franchise remains powerful. Revenue rose 14.4% year over year to RMB104.6 billion. Core local commerce revenue rose 10.1% to RMB71.5 billion and returned to operating profit. New initiatives grew 25% to RMB33.1 billion while losses narrowed to roughly RMB1.7 billion. Adjusted EBITDA rose 47.3% to RMB4.1 billion.
At around HK$75 per share, the market is pricing a future in which competition permanently suppresses profitability. I think that may be too pessimistic. The key question is not whether demand exists. It is whether Meituan can keep more of the economics flowing through the network.
Food delivery is only the entry point
The simplest mistake is to call Meituan a food-delivery company. Food delivery built the network, but the strategic asset is a dense local logistics system that can move almost anything within a city. Groceries, medicine, flowers, electronics and convenience goods can all use the same routing, courier supply and merchant relationships.
This is the logic behind instant retail. If the same consumer orders from Meituan more often, customer acquisition becomes more efficient. If the same courier network handles more orders in the same neighborhood, delivery cost per order can fall. If merchants receive more traffic, they have more reason to spend on advertising and platform services.
The long-term opportunity is therefore not one category. It is becoming the operating system for local consumption.
Q2 proved the core still has earning power
Core local commerce generated about RMB5.7 billion of operating profit in the quarter after a much weaker first quarter. That swing is crucial because it shows how sensitive the business is to competitive intensity.
When rivals subsidize heavily, the economics can disappear. When the market becomes more rational, the same network can generate substantial profit. The network did not become more valuable overnight. The cost of defending it changed.
For investors, that makes Meituan a margin-normalization story as much as a growth story. Revenue can keep compounding at a healthy rate, but the share price will depend on whether the company can translate that growth into durable operating profit.
Source: Meituan Q2 2026 results. Bars normalized for comparison.
JD.com and Alibaba are attacking the same opportunity
Meituan’s problem is that competitors understand the value of local commerce too. JD.com is pushing into food delivery and instant retail because frequent low-ticket orders can deepen customer engagement and improve logistics density. Alibaba has also increased investment in local services and instant commerce.
Our JD.com stock analysis explains why JD is willing to accept near-term losses in exchange for daily user frequency. For Meituan, this is both a threat and a validation. The threat is subsidy pressure. The validation is that some of China’s largest platforms believe Meituan’s market is strategically important enough to fight over.
Meituan’s advantage is density. It has spent years optimizing courier routes, local merchant supply and consumer demand at neighborhood level. That operating knowledge is difficult to copy quickly.
New initiatives are becoming less expensive
Meituan’s new initiatives segment generated RMB33.1 billion of revenue in Q2, up about 25%. Operating losses narrowed to around RMB1.7 billion. This is one of the most important developments in the quarter.
Historically, new initiatives made Meituan difficult to value because the company could generate strong profit in its core and reinvest much of it in grocery, international expansion and other businesses. Investors were effectively asked to trust management’s willingness to spend today for uncertain profits tomorrow.
Narrowing losses change the equation. They do not prove that every initiative will work, but they show a path toward growth that is less dependent on unlimited cash burn.
Keeta is an international option
Meituan’s international delivery brand Keeta has expanded beyond mainland China. International food delivery is difficult because local network effects matter and incumbents already know their markets. Yet Meituan has one major advantage: it has been trained in perhaps the most competitive delivery market in the world.
If Meituan can export its routing technology, merchant tools and operational discipline without recreating years of subsidies in every country, Keeta could become a meaningful second growth engine. If it cannot, international expansion may simply become another capital sink.
I would therefore measure Keeta by unit economics, not city count.
AI matters because Meituan is a giant optimization problem
Quarterly R&D spending rose 22.5% year over year to roughly RMB7.7 billion. Meituan is pushing AI into search, recommendations, merchant tools, advertising and logistics.
This is one of the most practical AI use cases in China. Millions of orders must be matched with merchants and couriers under changing traffic, weather and demand conditions. Small improvements in route planning, preparation-time prediction or courier positioning can reduce cost across enormous volume.
AI can also improve monetization. Better ad targeting and merchant recommendations can raise revenue without forcing more transactions through the network.
The most valuable AI outcome for Meituan may therefore be higher margins, not a separate AI business.
Drones and autonomous delivery are not science fiction
Meituan has invested in drones and autonomous delivery vehicles. At first glance that sounds like a technology showcase. Economically, the reason is simple: labor is one of the biggest variable costs in local delivery.
Autonomy will not replace every courier. Apartment buildings, mixed traffic and handoffs remain complicated. But partial automation on standardized routes can still matter. At Meituan’s scale, even a small reduction in cost per order can translate into billions of renminbi over time.
Worker protection raises the cost floor
China has increased pressure on major platforms to improve protections for gig workers. Meituan has expanded injury insurance and other rider benefits. This is socially important and financially relevant.
Investors should not assume the company can create long-term value by keeping labor economics artificially low. The right question is whether Meituan can earn attractive returns after internalizing a more sustainable cost structure.
Q2 suggests the answer can still be yes if competition remains rational.
Hotels and local services diversify the profit pool
Meituan is more than logistics. Hotels, travel bookings, in-store services and advertising use the same consumer traffic but carry different economics. Some of these activities do not require a delivery for every transaction, which can support higher margins.
This makes the comparison with Trip.com useful. Trip.com is more concentrated in travel. Meituan uses travel as one part of a much broader local-consumption ecosystem.
At HK$75, the stock is pricing permanent competition
Meituan trades far below the valuation it once commanded. Revenue is still growing double digits, but investors no longer capitalize that growth at a premium multiple because they fear recurring subsidy wars and regulation.
That caution is reasonable. But it also creates asymmetry if margins normalize. A company with more than RMB100 billion of quarterly revenue does not need a dramatic acceleration in sales to create large profit growth. A one-percentage-point improvement in annual operating margin on a revenue base above RMB400 billion is worth more than RMB4 billion of operating profit.
This is why operating leverage matters more than market-share headlines.
Three scenarios for Meituan
| Scenario | Core local commerce | New initiatives | Implication |
|---|---|---|---|
| Bear | Subsidy war returns | Losses widen | Low valuation remains justified |
| Base | High-single-digit margin | Losses narrow | Profit grows faster than revenue |
| Bull | Stable pricing and strong instant retail | Keeta and grocery approach breakeven | Platform rerating becomes possible |
What would make me more bullish?
I want sustained profitability in core local commerce, continued narrowing of new-business losses and adjusted EBITDA growing faster than revenue. I also want international expansion to become selective rather than purely volume driven.
The strongest signal would be evidence that Alibaba and JD cannot force permanent subsidy wars without hurting themselves. Once the industry accepts rational economics, Meituan’s dense network becomes much more valuable.
What would break the thesis?
The biggest risk is renewed irrational competition. If rivals are willing to subsidize instant retail for years, margins can disappear quickly. Regulation around riders, merchant fees and food safety is another structural risk.
Capital allocation also matters. Meituan has historically been willing to invest aggressively in new categories. If management again prioritizes market share over returns, the stock can remain cheap even while revenue grows.
How Meituan fits into China’s internet landscape
Our Tencent analysis describes a company whose network effects are mostly digital. Meituan’s network effects are partly physical. More consumers and merchants in the same local area make delivery infrastructure more efficient.
That physical density is harder to replicate than an app interface. It is also more expensive to maintain. This makes Meituan a hybrid: part software platform, part marketplace, part logistics infrastructure.
My view on Meituan stock
I think Meituan at around HK$75 is more interesting than it was when investors treated local commerce as an effortless growth story. The stock now reflects genuine skepticism. Competition is intense, regulation raises the cost floor and newer businesses still lose money.
But Q2 also demonstrated the underlying quality of the franchise. Revenue grew 14.4%, core local commerce returned to meaningful profit, new-business losses narrowed and adjusted EBITDA grew almost 50%.
The thesis is no longer about discovering whether Chinese consumers want delivery. It is about determining whether Meituan can translate extraordinary transaction density into durable profit.
If the answer is yes, the current valuation may prove too pessimistic because the company does not need heroic revenue growth. It only needs to keep more of the economics already moving through its network.
Sources
This article is independent analysis, not investment advice.
