Meituan has shocked investors with a profit warning that it expects a net loss of roughly RMB23.3–24.3 billion for the year ending 31 December 2025, reversing a RMB35.8 billion profit a year earlier. The company blamed the swing mainly on its core local commerce division, which it says has moved from an operating profit of about RMB52.4 billion in 2024 to an operating loss of roughly RMB6.8–7.0 billion in 2025, alongside stepped-up investment in overseas operations and the wider Meituan ecosystem.
The scale of the reversal underscores how ferocious competition has become in China’s on‑demand services market. Meituan dominates food delivery, local services and neighbourhood commerce, businesses that historically generated strong operating cash flow. In 2025 the firm explicitly framed its higher spending as a strategic response to “unprecedented” industry competition, increasing subsidies, marketing and ecosystem investment to defend market share and position the business for longer‑term growth.
For international investors the figures are stark: the company’s 2025 loss (around $3.2–3.4 billion) contrasts with the roughly $5 billion profit it recorded in 2024, and the operating swing in the domestic commerce unit (about a RMB60+ billion margin swing) shows pressure on both volumes and margins. Market reaction has been immediate, with Meituan’s Hong Kong market capitalisation sliding and investor concern intensifying over the firm’s near‑term return on capital.
The announcement also signals a broader strategic bet. Meituan is accelerating investment overseas at a time when its domestic franchise is facing price competition and margin compression. Expanding internationally can diversify growth opportunities, but it often requires heavy upfront spending for logistics, subsidies and local marketing — the very costs that are now dragging on consolidated profitability.
The warning raises several questions about Meituan’s priorities and the balance between growth and profitability. If management persists with aggressive ecosystem spending, investors may demand clearer milestones for when these investments will translate into sustainable margins. Alternatively, a tactical pullback in subsidies could stabilize earnings but would risk market share losses to aggressive competitors in a low‑growth domestic consumption environment.
More broadly, Meituan’s move is a test case for Chinese internet platforms that once achieved resilient margins through scale. It suggests that, even after regulatory calm returned to the sector, competition and business‑model evolution (from pure marketplace to integrated ecosystem) can reintroduce volatility into profit cycles. How Meituan navigates investor expectations, competition and its overseas rollout will be watched closely as a barometer for the health of China’s consumer‑tech complex.