Alibaba’s Food Delivery Fiasco: Is It Time to Bail or Buy?

$JD.com(JD)$ $MEITUAN(MPNGF)$ $Alibaba(BABA)$

Morgan Stanley has slashed Alibaba’s price target to $150, spotlighting its costly plunge into food delivery and flash commerce as a profit killer. With the stock tumbling to around $100, investors are on edge. Is this a golden opportunity to snag a deal, or a warning to run for the hills? Let’s dive into the chaos of China’s food delivery war, weigh the risks, and figure out who might come out on top.

Why Morgan Stanley’s Sounding the Alarm

Morgan Stanley’s downgrade isn’t just a slap on the wrist—it’s a red flag. They’ve pinpointed two major headaches dragging Alibaba down:

Food Delivery Cash Burn: Alibaba’s Ele.me platform is hemorrhaging money, with billions funneled into subsidies to claw market share from giants like Meituan and JD.com. Think discounts so steep they’re practically giving food away.
Flash Commerce Overreach: The push for ultra-fast delivery—think groceries at your door in an hour—is racking up logistics costs faster than profits can keep up.

The result? A grim outlook with earnings taking a hit. Alibaba’s stock has slid over 27% from its 2025 peak, and the bleeding might not stop soon. But here’s the kicker: Morgan Stanley still sees long-term potential, keeping an “Overweight” rating. So, is this a storm to weather or a sinking ship?

The Food Delivery War: A Billion-Dollar Bloodbath

China’s food delivery scene is a gladiator pit, and Alibaba, JD.com, and Meituan are the warriors duking it out. Here’s the lowdown:

Meituan’s Reign: Holding over 60% of the market, Meituan’s the king—but even kings bleed. Subsidies are eating into margins, and a recent app crash under order volume shows the strain.
JD.com’s Ambush: JD’s “JD Takeaway” is gaining ground fast, with millions of daily orders. Their $1.4 billion subsidy blitz is a bold move, but it’s a gamble that’s torching cash.
Alibaba’s Underdog Fight: Ele.me and Taobao Flash Sales are late to the party, lagging in third place. Alibaba’s throwing money at the problem, but it’s not enough—yet.

This isn’t a war of innovation; it’s a war of wallets. Everyone’s slashing prices, and no one’s winning the profit game. The question is: who can outlast the others?

Buy the Dip or Dodge the Drop?

Alibaba at $100 looks tempting—a tech titan at a discount. But timing is everything. Here’s what’s at stake:

The Downside Risk: If the subsidy war drags on, Alibaba’s profits could stay in the gutter, pushing the stock toward $90. More losses in food delivery could spook investors further.
The Upside Play: Alibaba’s e-commerce empire and booming cloud business are still cash cows. If they can rein in the bleeding and pivot to profitability, $130 by 2026 isn’t a pipe dream.
The Numbers: A P/E ratio of 15.24 screams undervalued compared to peers. The PEG ratio at 0.5 hints at growth potential—if they survive the chaos.

So, when’s the move? If you’ve got steel nerves, $95-$100 could be your sweet spot for a long-term bet. Prefer safety? Wait for signs the subsidy madness is cooling—think fewer discounts or a clear market leader.

Alibaba Stock Snapshot (Table)

Who’s Got the Edge in This Subsidy Slugfest?

Predicting a winner in this mess is like picking a horse mid-race, but here’s the rundown:

Meituan: Scale and logistics give them the lead, but thin margins mean they’re one misstep from trouble.
JD.com: Deep pockets and a loyal customer base make them a contender, especially if they tie food delivery to their e-commerce ecosystem.
Alibaba: The wildcard. They’re behind, but their diversified revenue—e-commerce, cloud, AI—could keep them afloat longer than the others.

Meituan’s ahead for now, but JD.com’s aggression and Alibaba’s resilience could flip the script. The real winner? The one that stops bleeding cash first.

Market Share Breakdown

Stay Away or Dive In?

The big three—Alibaba, JD.com, and Meituan—are locked in a brutal fight, and right now, it’s a spectator sport. Alibaba’s the most intriguing of the trio: its food delivery woes are loud, but its core strengths are louder. At $100, it’s a gamble with a safety net—unlike Meituan and JD.com, who are all-in on this war.

Here’s the play: dip your toes in Alibaba at $95-$100 if you’re in for the long haul, but keep an eye on the exit. Hedge with something like VIXY at $15 to cushion any market jolts. The food delivery war’s a mess—don’t get caught in the crossfire unless you’re ready to ride it out.

The Bottom Line

Morgan Stanley’s downgrade paints Alibaba as a giant with a limp, but not a knockout. The food delivery war is a profit shredder, and Alibaba’s feeling the heat. Yet, at $100, it’s a bruised champ with a shot at a comeback. Meituan’s leading, JD.com’s charging, but Alibaba’s staying power could surprise us all.

Would you jump in now or wait for the war to cool? Drop your take below!

📢 Like, repost, and follow for daily updates on market trends and stock insights.

📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

📌@Daily_Discussion @Tiger_comments @TigerStars @TigerEvents @TigerWire

Alibaba +8%! Can AI Rescue Alibaba from Its Delivery Doldrums?

Alibaba soars 8% as Nvidia's announcement boosts virtually Chinese Al companies;

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.