At HK$739 billion market cap, Meituan (SEHK:3690) is the number one food delivery platform in China.
Yet shares have been on a wild ride since the COVID-19 pandemic.
Since the pandemic, tech regulatory crackdown on anti-competition behaviors, as well as slowing growth, investors now wonder if it’s still worth looking at.
In 2018, Meituan went public in Hong Kong with an IPO price of HK$69 per share. At one point, Meituan shares rocketed to an all-time high of ~HK$451 in 2021.
Since then, shares have stumbled by over 73%. While the Hang Seng Index has surged over 20% this year, Meituan shares are down 21% year to date this year.
Is Meituan shares worth buying today? Let’s dive in!
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Meituan’s business model explained
Meituan is China’s version of DoorDash, Uber Eats, and Yelp all rolled into one “super-app” – but bigger. What makes Meituan unique is its “Food + Platform” model.
Today, Meituan operates China’s largest food delivery platform with a commanding ~67% market share.
Today, its delivery platform services account for ~40% of its total revenues.
It also has an entire ecosystem of services including in-store dining like restaurant reservations, hotel & travel bookings, grocery deliveries, ride-hailing services and so on.
What’s more, its platform serves over 700 million monthly active users and works with over nine million active merchants. Its delivery network includes ~7.5 million riders scooting across China’s densely populated cities.
Its secret sauce? Its “AI-powered” logistics and tech infrastructure. For instance, the more orders it handles in a specific area, the more efficient its delivery network becomes.
Its technology allows Meituan to learn about customer behaviour, which creates a powerful competitive moat that’s tough for rivals to crack.
Meituan is all about growth
Over the last five years, the company showed impressive revenue growth. As it scaled its business, its efficiency has improved and started to record good profits, though this is not consistent yet.
Will Meituan ever pay a dividend?
But here’s what might disappoint dividend investors: Meituan has never paid a dividend.
As a growth-oriented company, Meituan is reinvesting every dollar back into the business to drive growth, expand globally and build its economic moat.
In fact, the company has consistently announced “No Dividend” in its financial reports year after year.
For dividend investors, this could be a deal-breaker. For growth investors, it’s a big bet for market domination.
Here’s the thing: This isn’t unusual for high-growth companies, especially in China. These fast-expanding businesses tend to reinvest their profits into the business in order to gain market share.
What’s more, management of such companies normally believe shareholders are better served by reinvesting profits rather than distributing them.
So, what’s driving future growth?
Meituan has been making strategic moves. Its CEO Wang Xing announced the company is investing billions of dollars in AI chips.
The company has allocated CNY5.8 billion in 1Q2025 for R&D expenses, with heavy focus on AI-powered logistics and delivery optimization.
Meituan is also taking their food delivery service global through its Keeta brand. Since its launch, Deliveroo has shut its business in Hong Kong.
Meanwhile, Keeta is also grabbing market share quickly in Saudi Arabia. This year, the company has pledged over US$1 billion investments over the next five years to expand Keeta in Brazil.
What’s more, Meituan has also received regulatory approval for over 520,000 drone deliveries across China cities for its fourth-generation drone. This would bode well for its fast-expanding delivery segment.
Risks you need need to know
Despite Meituan’s impressive growth story, here’s what I’m paying attention to.
First, brutal competition. The food delivery war in China is heating up under the backdrop of China’s “involution” (內捲). ByteDance’s Douyin (TikTok’s Chinese sister) is aggressively expanding into local services.
Alibaba is fighting back with massive subsidies through Ele.me. Even JD.com is joining the fight. This heavy competition could potentially wreck Meituan’s margins.
Next, Chinese tech companies continue to face regulatory risks. This is because tech platforms in China are known for their “predatory-pricing” strategies, which could skew the competitive environment.
What’s more, regulators focus on labour law changes, antitrust enforcement and platform regulations that could increase operating costs.
For instance, over the last couple of years Meituan was repeatedly accused of involving anti-competition behaviors, which concluded with a CNY3.4 billion fine back in 2021.
My final thoughts
Meituan is a high-growth, high-risk tech play in China’s evolving digital economy. Dividend investors may be disappointed as there’s little intention to start paying dividends in the near term.
The Good: Dominant market position, strong revenue growth, ambitious global expansion, and significant AI investments position it for long-term success.
The Bad: No dividends, extreme volatility, intense competition, and sensitivity to Chinese economic conditions make it unsuitable for conservative investors.
If you believe in Asia’s food delivery story, not mind the ups and downs of a “growth stock” – shares have proven it can lose over 73% of its value from peak to trough – Meituan could potentially be worth looking at. In this case, I’d prefer to call this an intelligent speculation.
