Meituan Dips Below 2018 IPO Price as Selloff Reaches Extremes

Charlotte Yang, Bloomberg News

(Bloomberg) -- A sustained, steep selloff in Meituan briefly drove the Chinese delivery giant’s stock below its 2018 initial public offering price.

The Hong Kong-listed shares, which have slid 85% from an all-time high three years ago, closed Wednesday below the IPO price of HK$69.

Meituan has tumbled on investor worry over its outlook due to weak Chinese consumer sentiment and increasing competition with rivals including ByteDance Ltd. The drop extended this year amid China’s persistent economic weakness, with Meituan tracking losses in a gauge of Chinese technology stocks listed in Hong Kong.

Meituan Dives After Warning of Slowdown as Consumption Wanes

The selloff highlights how investors have grown disenchanted with China’s internet majors. Alibaba Group Holding Ltd. is down 78% from record levels, while Tencent Holdings Ltd. has dropped more than 60% from its peak.

There are signs that Meituan’s decline has become excessive, with the stock dipping back below technical oversold levels on Wednesday. Its current share price is 25% below even the most bearish analyst’s target, Bloomberg-compiled data show.

“We believe the market has been overly negative on Meituan’s growth and earnings outlook on competition,” Goldman Sachs Group Inc. analysts including Ronald Keung wrote in a Jan. 16 note. The broker says the slide is unjustified given that the company’s food delivery business volumes have grown threefold over the past five years while profitability has surged by 20 times.

--With assistance from Jeanny Yu.