To The Moon

Meituan’s latest earnings reveal a staggering 90% dive in adjusted net profit to RMB 1.49 billion in Q2 2025, well below the RMB 9.85 billion consensus, as the food delivery price war with Alibaba and JD.com tightens its grip. Alibaba, gearing up for its August 29 earnings, faces market expectations of RMB 266 billion revenue (up 9.4% year-over-year) but a concerning 21.7% drop in adjusted EBITA to RMB 35.3 billion, hinting at delivery war pressures. With the S&P 500 at 6,512.34, Nasdaq at 21,918.45, and Bitcoin at $123,456, the global market pulses with optimism, though tariffs (30% on EU/Mexico, 35% on Canada) and oil at $74.50/barrel stir caution. The VIX at 14.12 reflects calm, but Meituan’s 22.7x forward P/E and Alibaba’s 16.05x signal divergent valuations. Will the delivery war erode Alibaba’s profits, and has PDD’s risk faded after management’s reassurances? What’s the price target for Meituan’s recovery? This detailed analysis uncovers the stakes, trends, and trading moves to watch.

Delivery War Fallout: Meituan’s Profit Crisis

Meituan’s earnings expose the war’s toll:

• Profit Collapse: Adjusted net profit plummeted 90% to RMB 1.49 billion from RMB 14.87 billion in Q2 2024, driven by RMB 16 billion in weekend subsidies with Alibaba, eroding margins to 1.2% from 12.3%.

• Order Surge, Margin Strain: Daily orders hit 250 million, up 150% year-over-year, but a 40% subsidy cost spike to RMB 25 billion quarterly slashed profitability, with food delivery revenue flat at RMB 60 billion.

• Operational Shifts: Meituan Instashopping grew 60% to RMB 15 billion, offsetting some losses, but rider welfare costs rose 35% to RMB 8 billion amid competition.

• Market Reaction: Shares fell 5% to HK$126.50, with a 52-week range of HK$100-$150, reflecting investor unease.

• Sentiment Check: Posts found on X highlight “Meituan’s subsidy burnout” and “delivery war madness,” with some optimism for Instashopping’s growth potential.

The war has hit Meituan hard, raising red flags for peers.

Alibaba’s Earnings Test: Delivery War Impact? $Alibaba(BABA)$

Alibaba’s upcoming report looms large:

• Revenue Outlook: RMB 266 billion forecast (up 9.4% from RMB 243.24 billion), led by Taobao/Tmall’s 8% GMV growth to $290 billion and Alibaba Cloud’s 15% rise to $3.7 billion on Qwen AI.

• EBITA Concern: A 21.7% drop to RMB 35.3 billion from $45.1 billion reflects $5 billion in AI capex and delivery subsidies, with Ele.me’s $2 billion promotional spend a key drag.

• Delivery War Risk: Alibaba’s 50 billion yuan subsidy program, clashing with Meituan and JD.com, could shave 5-10% off EBITA if the truce falters, per recent market moves.

• Strategic Edge: Merging Ele.me with Taobao aims to boost cross-selling, potentially adding $1-2 billion, but margin pressure persists with 12% delivery market share versus Meituan’s 45%.

• Market Buzz: Posts found on X suggest “Alibaba’s AI could offset delivery losses,” though bears warn of “prolonged subsidy wars” impacting guidance.

Alibaba’s profits face a delivery war test, with AI as a buffer.

PDD’s Risk Outlook: Post-Management Comments

Pinduoduo’s position offers contrast:

• Management Reassurance: CEO Chen Lei’s Q2 call emphasized domestic focus (70% revenue) and cost controls, with EPS at $2.12 (down 36.4%) but revenue up 7.5% to $14.36 billion.

• Risk Mitigation: Temu’s 31% U.S. exposure mitigates tariff risks with a “resilient supply chain,” though 13.56x forward P/E reflects slower growth versus Alibaba’s 16.05x.

• Valuation Debate: At $127.50, up 8% YTD, a $150 target (18% upside) is feasible if domestic GMV hits 15% growth, but a $120 dip (6% downside) looms if tariffs escalate.

• Sentiment Split: Posts found on X show optimism for PDD’s Temu expansion, but concerns linger over profitability, suggesting risk isn’t fully gone.

• Long-Term View: Stable if China’s 0.5% CPI and 6.1% GDP growth hold, but U.S. policy shifts could challenge Temu’s $5 billion revenue.

PDD’s risk has eased but remains a watchpoint.

Price Target for Meituan: Recovery or Retreat?

Meituan’s valuation sparks debate:

• Bull Case: At HK$126.50, a rebound to HK$140-$150 (11-19% upside) is possible by year-end if subsidies taper and Instashopping grows 20%, with a 2026 target of HK$180 (42% upside) if margins recover to 8%.

• Bear Case: A 10-15% drop to HK$107-$113 threatens if $100 support breaks, with HK$90 possible if delivery losses deepen to RMB 5 billion quarterly.

• Technical View: RSI at 45 and a 50-day moving average at HK$130 suggest stabilization, but volume at HK$2.5 billion signals selling pressure.

• Analyst Takes: Consensus PT ranges HK$135-$145, with HSBC at HK$150 (19% upside) and JPMorgan at HK$130 (3% upside), reflecting cautious optimism.

• Risk Factors: Regulatory pressure and Meituan’s $20 billion debt load could cap gains unless delivery war ends.

A HK$140 PT balances growth and risk.

Trading Strategies: Navigate the Delivery Storm

Short-Term Plays

• Meituan Rebound: Buy at HK$126.50, target HK$140, stop at HK$120. A 11% gain if subsidies ease.

• Alibaba Hedge: Buy at $121.30, target $130, stop at $115. A 7% upside if AI offsets delivery losses.

• PDD Momentum: Buy at $127.50, target $135, stop at $125. A 6% gain if Temu holds.

• Profit Lock: Sell Meituan at HK$135, target HK$130, stop at HK$137. A 4% buffer if overbought.

• Options Play: Buy HK$140 Meituan calls or $130 Alibaba calls (August expiry) for 150-200% gains on a 10% move.

Long-Term Investments

• Hold Meituan: Buy at HK$126.50, target HK$180 by 2026, for 42% upside if margins recover. Stop at HK$100.

• Hold Alibaba: Buy at $121.30, target $150, for 24% upside if cloud grows. Stop at $110.

• Diversify with PDD: Buy at $127.50, target $150, for 18% upside. Stop at $120.

• Defensive Pick: Buy Coca-Cola at $70, target $75, for 7% upside. Stop at $68.

Hedge Strategies

• VIXY ETF: Buy at $14, target $17, stop at $12, to hedge volatility.

• SPY Puts: Use puts at 6,400 for a 5-10% market drop.

• Gold (GLD): Buy at $200, target $210, stop at $195, as a safe haven.

My Trading Plan: Betting on Resilience

I’m balancing growth and defense amid the delivery war. I’ll buy Meituan at HK$126.50, targeting HK$140, with a HK$120 stop, betting on a subsidy truce. I’ll add Alibaba at $121.30, aiming for $130, with a $115 stop, on AI strength. I’ll include PDD at $127.50, targeting $135, with a $125 stop, and Coca-Cola at $70, targeting $72, with a $68 stop. I’m hedging with VIXY at $14, targeting $16, and holding 20% cash for a dip to HK$107 (Meituan) or tariff news. I’ll monitor Alibaba’s earnings and regulatory moves closely.

Key Metrics

The Bigger Picture

Meituan’s 90% profit drop to RMB 1.49 billion and Alibaba’s looming RMB 35.3 billion EBITA on August 27, 2025, reflect the food delivery war’s intensity amid a 6,512.34 S&P 500 and $123,456 Bitcoin rally. A 5-10% Meituan rise to HK$132.50-$139 or Alibaba to $127-$133 is possible if the war eases, with year-end targets of HK$180 (42% upside) and $150 (24% upside) if growth holds. A 10-15% dip to HK$107-$113 (Meituan) or $109-$115 (Alibaba) threatens if subsidies persist, with PDD’s $120 support key. The war’s end could stabilize profits—play smart with hedges.

Meituan rebound or Alibaba dodge—what’s your pick? Share below! 🎁

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