Meituan Cries 'Irrational!' As Alibaba Escalates Delivery Battle

Alibaba Group BABA escalated China’s instant delivery price war by launching a massive 50 billion Chinese yuan subsidy program for consumers and merchants on its Taobao Shangou platform, intensifying an already cutthroat battle for market share against JD.com JD and Meituan MPNGY.

The campaign, which includes “Super Saturdays” sales over the next 100 days, aims to boost consumption across groceries, food delivery, and other on-demand services.

Facing what Meituan described as “irrational competition,” the Beijing-based company reluctantly joined the fray to avoid appearing weak, SCMP reported on Thursday.

Also Read: Alibaba Stock Slides 5% After Revenue Miss, Cloud Spend Hits Free Cash Flow

The rivalry, reignited by JD.com’s 10 billion yuan investment in benchmark restaurants earlier this year, peaked over the past weekend as all three players flooded the market with aggressive subsidies. The price war has dramatically lowered delivery costs for items like coffee and tea, sometimes to just a few yuan, and driven total daily orders from 100 million at the start of 2025 to over 250 million.

Despite setting a record with 150 million orders over the weekend, Meituan warned of unsustainable economics. Wang criticized the mismatch between rising order volume and actual value, urging Alibaba and JD.com to prioritize long-term viability over flashy metrics.

The financial repercussions of this price war are already evident. JPMorgan Chase warned that Alibaba, Meituan, and JD.com shares may remain under pressure for three to six months due to ongoing uncertainty around profit margins and aggressive promotional spending.

Alibaba, specifically, has seen its market value plummet by $100 billion, with its shares dropping 27% since March, nearly double the decline experienced by its tech peers, according to Bloomberg.

Goldman Sachs warned Alibaba could lose 41 billion yuan ($5.7 billion) in food delivery by June 2026. Consequently, HSBC cut its price target by 15%, citing rising costs, while analysts like Julia Pan see room for recovery if regulators step in. Still, Franklin Templeton’s Nicholas Chui cautioned that profit-eroding price wars may deter investors.

Meanwhile, Bridgewater Associates expressed growing confidence in Chinese stocks, noting in its second-quarter investor letter that it “moderately increased” equity exposure by June 30, citing strong policy support and attractive valuations. The firm credited China’s rapid April response to U.S. tariff-driven market declines for stabilizing equities and sees current low valuations as offering favorable risk-reward.

Price Actions: BABA shares are trading higher by 3.41% to $121.30 premarket at last check Friday. JD is up 4.13%.

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