The 2010s saw the births of many significant Chinese internet startups that grew into magnates and shaped up the world’s second-largest economy in many ways. Local service provider Meituan Dianping (Meituan, HKEX: 3690) is one of them.
Before co-founding Meituan in 2010, electronic engineering graduate Wang Xing had few attempts at creating a Chinese version of Facebook and Twitter with no success. Inspired by then-popular daily deal platform Groupon, Wang Xing joined the fray to launch a local mimic called Meituan.
Meituan was one of the 6,000 services in China at the peak of the country’s group buying maelstrom. As the last man standing, Meituan, in ten years, first pivoted its business to food delivery and then acquired a local competitor Dianping which is a Yelp-like business rating platform. Later on, it expanded into a wide range of services ranging from grocery delivery, e-wallets, bike sharing, and ride-hailing to even power bank sharing. Not to mention it also ventured into the hotel and travel booking sector.
Some of these deployments, like grocery delivery, and Airbnb-like homestay, are related and rooted in its widely-casted delivery network. But some other offerings, like ride-hailing, bike-sharing, and the newly launched e-credit card system, seem a bit off and are facing severe market competition from other internet giants like Alibaba (NYSE: BABA; HKEX: 9988) and Didi.
In the quarter past, the COVID-19 outbreak hit Meituan’s food delivery and travel booking heavily, with a USD 2.4 billion revenue recorded in the first quarter of 2020, a 12.6% slip from 2019 Q1. The group posted a net loss after three consecutive profitable quarters.
However, investors still hold faith in Meituan Dianping, even in the face of Alibaba’s reignited interests in boosting up its local life services ecosystem.
Exceeding USD 100 billion market cap last Tuesday upon the earnings report release, Meituan is now the third-largest Chinese internet company by market cap after Alibaba and Tencent (HKEX: 0700).
