Intense competition in China's food delivery market has resulted in a significant drop in market value for Alibaba Group, totaling $100 billion. Shares have declined 28% from recent highs, reflecting a larger trend among competitors like JD.com and Meituan. Brokers have reduced price targets as the battle continues. High financial stakes are evident, with an estimated $4 billion spent on discounts in a short period. Alibaba's focus on food delivery is diverting attention from its AI growth, while competitors ramp up their strategies amid regulatory scrutiny and investor concerns about the industry's future.
Alibaba's food-delivery strategy has distracted investors away from the DeepSeek-led AI boom that drove its shares up more than 80% in just two months earlier this year.
At least four brokers, including Goldman Sachs Group Inc. and HSBC Holdings Plc, have cut their price targets by an average of 8% since late June as the latest phase of the yearslong turf war continues to escalate.
Sector leader Meituan said Saturday that it was going into 'attack' mode versus Alibaba, while JD.com announced a new incentive scheme this week.
Nomura Holdings Inc. estimates about $4 billion has been burned on discounts in the June quarter alone by Alibaba, Meituan, and JD.com.
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