Mar 24, 2023
Meituan’s Revenue Jumped After Covid Boosted Meal Delivery
(Bloomberg) -- Meituan’s revenue surged on strong demand for takeaway, giving the world’s largest meal delivery service more leeway to adjust to China’s sudden Covid reopening.
Sales rose 21% to 60.1 billion yuan ($8.8 billion) in the quarter ended December, against an average projection for 57.9 billion yuan, the company said in a statement Friday. It reported a smaller-than-expected loss of 1.08 billion yuan.
The Beijing-based company is preparing for choppy waters ahead as a post-pandemic resumption of economic activity threatens to slow online demand. China reported a rebound in consumer spending after dropping coronavirus restrictions, but has warned of risks to the economy as unemployment rises and real estate investment stalls.
The company is also fighting off heightened competition from new entrants such as ByteDance Ltd., hiring aggressively on the mainland to keep its lead in the $145 billion Chinese food arena. ByteDance’s Douyin — Tiktok’s cousin in China — is testing a grocery and food delivery service in Beijing, Shanghai and Chengdu and is looking to gain ground against both Meituan and No.2 delivery service provider Ele.me, owned by Alibaba Group Holding Ltd.
Meituan has shed more than 19% of its value this year, the worst performance by far among China’s biggest technology firms. Investors are worried about the hit to its bottom line as Meituan spends to expand and fend off upstarts like ByteDance.
The company’s longer-term prospects hinge on its ability to navigate demand swings in a post-pandemic market and its success in new arenas and overseas, as longstanding backer Tencent Holdings Ltd. unwinds its shareholding.
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