Meituan's Earnings Estimates Revised Up Over 500% from Intra-Year Low as Food Delivery Price War Cools
nashnova research
China's food-delivery price war is fading faster than expected — Meituan, Ele.me, and JD.com all reported sharply lower subsidies last quarter, with Meituan's consensus earnings estimate rising over 500% from its year-to-date trough, the clearest signal yet that the sector's margin squeeze is easing.
How did the price war play out?
JD.com entered food delivery in February 2025, igniting the subsidy war. Government curbs on excessive competition followed, and all three players cut back promotions such as free drinks.
The outcomes diverged: Ele.me gained some market share, while JD.com's heavy spending failed to deliver lasting traction — it has already slowed its expansion pace.
This means → the price war produced no outright winner; instead it accelerated the industry's return to rational economics — whoever stopped the bleeding first recovered first.
Why did earnings estimates spike so sharply?
Meituan posted a surprise quarterly profit for the period ending in June. Analysts swiftly raised estimates: Meituan by over 500%, JD.com by roughly 25%, and Alibaba by about 6%.
In plain terms = the Street had been pricing all three for sustained cash-burn. Subsidies pulled back faster than expected, and estimates rebounded from a rock-bottom base.
BNP Paribas' Jason Lui said: "The most extreme subsidy phase has most likely ended, which should help gradually restore confidence in consumer stocks."
Why does Meituan benefit the most?
Meituan has the highest dependence on food delivery, giving it the greatest operating leverage as the war cools. Its dominance in high-ticket orders helped protect margins throughout.
This reflects a structural moat: Meituan's merchant coverage, product infrastructure, and membership program create user stickiness that rivals struggled to crack with subsidies alone.
Mizuho's Willer Chen noted: "The recovery trend has only just begun and may not yet be fully reflected in the share price."
What risks should investors watch in H2?
In Q3, Meituan faces peak-season summer costs and a newly introduced rider casualty insurance expense, which may pressure near-term profits.
UOB Kay Hian's Julia Pan expects all three companies to see meaningful earnings improvement in H2: "Last year's extreme buy-one-get-one-free bubble tea deals are unlikely to return — the facts have already proved that path doesn't work."
This means → Q3's actual cost impact is the first real test — whether the estimate upgrades translate into sustained share-price recovery hinges on this data point.
Why haven't the share prices caught up?
Meituan, Alibaba, and JD.com have all declined in Hong Kong this year, underperforming China's AI and semiconductor names.
In plain terms = this year's money chased AI; consumer stocks were left behind. Earnings estimates surged, but capital flows haven't followed yet.
Goldman Sachs projects Meituan's daily order volume will grow further through 2027, while Alibaba's and JD.com's volumes are expected to hold steady — the long-term thesis is improving, but the short-term needs a catalyst.
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