By Yifan Wang
Meituan shares slumped to a 19-month low on Friday after China called for online-delivery platforms to cut service fees and provide support measures for catering merchants in a bid to help the country's struggling service sector.
The delivery giant shed as much as 18% shortly after 14 government agencies in China, led by state planner the National Development and Reform Commission, introduced new measures to ease strains on the service sector.
Meituan ended the session 15% lower at $188 Hong Kong dollars (US$24.11), its lowest close since July 2020.
Shares of other Chinese internet and e-commerce companies also weakened substantially following the government's new policy. Tencent Holdings Ltd., Meituan's largest shareholder, lost 1.9% and Alibaba Group Holding Ltd., which also operates a food-delivery business, was down 2.8%. E-commerce platform JD.com Inc. ended 2.8% lower.
The authorities said in a joint statement Friday that they will guide online-delivery platforms to further reduce service rates for food-and-beverage vendors in order to help bring down operating costs. Officials also said they will guide online platforms to provide fee discounts for merchants in areas with higher pandemic risk, which usually means tighter social restrictions that could weigh on restaurant operations.
The new policy comes at a time of growing concerns over Chinese internet companies' earnings amid weak consumption and a slowing economy. Nation-wide outbreaks in the fourth quarter, coupled with muted consumer spending, are expected to pressure Meituan's delivery and hotel businesses, Orient Securities said in a recent report.
Write to Yifan Wang at yifan.wang@wsj.com
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February 18, 2022 at 03:46PM
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Meituan Shares Dive to 19-Month Low After China Calls for Lower Delivery Platform Fees - MarketWatch
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