New energy is undoubtedly an investment hotspot for the next 10, 20, or even 50 years. On February 13, 2026, MEITUAN-W chose to issue a profit warning just before the Spring Festival, projecting a net loss between 23.3 billion and 24.3 billion yuan for the full year of 2025. The announcement immediately alarmed shareholders, casting a shadow over the holiday period. This represents a dramatic reversal from 2025's net profit of nearly 36 billion yuan, with the intense food delivery competition turning that profit into a loss exceeding 23.3 billion yuan—a swing of roughly 60 billion yuan, highlighting the severe challenges in China's business environment.
However, MEITUAN-W shareholders need not be overly pessimistic. While a 23-billion-yuan loss appears staggering, the magnitude was largely in line with institutional forecasts and even better than the pessimistic projections from firms like Nomura and Goldman Sachs. The news gained widespread attention primarily due to market focus on the competition between Alibaba and MEITUAN-W in food delivery, compounded by the psychological impact of a nearly 600-billion-yuan profit swing over two years. Particularly concerning was the core local commerce segment—including food delivery, in-store services, and instant retail—which swung from an operating profit of 52.4 billion yuan in 2024 to a loss of 6.8–7.0 billion yuan. This shift shattered the market consensus that food delivery was MEITUAN-W's cash cow and exposed the company's vulnerability.
The company attributed the losses to strategic investments aimed at enhancing its ecosystem amid unprecedented industry competition in 2025. These measures included strengthening consumer-side marketing and price competitiveness, increasing rider incentives to improve service quality, and supporting merchants to boost operational efficiency. However, from a rough observational standpoint, subsidies in the food delivery segment did not appear significantly higher in the second half of the year. While occasional discounts and coupons made some orders cheaper, overall pricing often remained higher than competitors like Alibaba and JD.com, even as Alibaba's subsidies tapered. The drastic shift from a 12-billion-yuan profit in the first half to a 30-billion-yuan loss in the second half raises questions about where the capital was allocated, awaiting clarification from formal financial reports and management discussions.
How did MEITUAN-W reach this point? The competitive landscape has shifted dramatically. Several years ago, CEO Wang Xing expressed confidence in expanding boundaries despite numerous rivals, leading MEITUAN-W to evolve from winning the group-buying war into a local services superplatform with over 700 million users, millions of merchants, and annual revenues exceeding 300 billion yuan. However, the company now faces pressure on multiple fronts: food delivery is being squeezed by Alibaba and JD.com, while in-store services contend with fierce competition from Douyin. Douyin's gross merchandise volume for in-store services has reached about 60% of MEITUAN-W's and is growing rapidly, posing a long-term threat to its leadership. Similarly, MEITUAN-W's food delivery market share has fallen below 50% amid intense rivalry.
Critics suggest that Wang Xing's strategy of endless expansion created too many enemies, but this view oversimplifies business competition. Boundary expansion is natural; the issue is execution. Historically, MEITUAN-W executed well, leveraging its team's effectiveness to succeed in areas like group buying, food delivery, travel, and instant retail. Past public dissatisfaction stemmed not from failure but from perceived monopolistic practices after achieving market dominance. Current competitive pressures reflect inherent business vulnerabilities rather than a decline in operational capability. This leads to the critical question: Does MEITUAN-W possess a durable moat?
Internet companies typically derive moats from scale effects, two-sided market dynamics, and network effects. As the food delivery leader, MEITUAN-W benefits from certain scale advantages: higher order volumes spread fixed costs, while greater order density reduces delivery costs and improves efficiency through optimized AI routing. Its two-sided market is also stronger, with more users attracting more merchants, enriching product variety, and further attracting users. Additionally, a larger user base enhances review systems and user experience, strengthening merchant relationships.
However, food delivery services are highly homogeneous, resulting in low user loyalty and minimal switching costs. Unlike ride-hailing, merchant services are not exclusive to one platform, weakening platform control over them. This explains why Alibaba's subsidies have been effective. Consequently, the moat in food delivery is weaker than in other internet sectors. MEITUAN-W's defensive advantage lies primarily in its operational strength and accumulated expertise in fulfillment cost efficiency.
Unfortunately, Alibaba also possesses a formidable team, and its financial resources compensate for any operational gaps, as seen in recent promotions for its delivery services and AI products. As Alibaba gains market share and order volume, coupled with its AI capabilities, it could narrow the fulfillment cost gap with MEITUAN-W. Recent institutional estimates indicate Alibaba's delivery cost per order is only 0.2–0.3 yuan higher than MEITUAN-W's. If accurate, further market share gains and route optimization could equalize costs. Should that occur, Alibaba would have greater leeway to sustain subsidies, posing a long-term challenge to MEITUAN-W.
MEITUAN-W is not passively accepting this; the substantial losses in the second half partly reflect costs of defensive countermeasures. The tug-of-war between the two giants will likely persist. A key variable in this contest is AI.
During the Spring Festival, Alibaba's AI platform invested 3 billion yuan in offering free milk tea and enabling users to order food delivery directly through AI. This initiative not only generated 120 million orders in six days but also concretized AI agent applications. While debates continue about the reliability of AI-based ordering, the concept holds appeal if AI can consistently secure the lowest prices. The convenience of AI recommendations and ordering is attractive to users across age groups.
A significant uncertainty is that price disparities due to platform-specific subsidies may complicate comparison shopping, especially if MEITUAN-W, as the incumbent leader, refuses to integrate with Alibaba's AI, potentially dampening user adoption. Conversely, MEITUAN-W may develop its own AI product, but its weaker AI capabilities compared to Alibaba could result in an inferior user experience. If AI ordering becomes a trend, Alibaba could gain a significant competitive edge, while MEITUAN-W faces a substantial disadvantage.
Ultimately, Alibaba is unlikely to abandon food delivery, viewing it as strategic for instant retail and AI agent development. MEITUAN-W, as the smaller player, has limited options when a financially stronger competitor is determined to invest heavily in capturing market share, especially in a business with low inherent user loyalty driven largely by subsidies. The decisive factors will be whether Alibaba's growing market share and AI capabilities can sustainably reduce fulfillment costs, making its delivery business self-sustaining, and whether MEITUAN-W can secure external support to counter Alibaba's offensive. These uncertainties mean the outcome remains fluid, requiring close monitoring as the situation evolves.
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