{"id":15859,"date":"2025-07-11T07:20:48","date_gmt":"2025-07-11T07:20:48","guid":{"rendered":"https:\/\/topat10.com\/?p=15859"},"modified":"2025-07-11T07:20:48","modified_gmt":"2025-07-11T07:20:48","slug":"alibaba-risks-deepening-100-billion-rout-as-turf-war-heats-up","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=15859","title":{"rendered":"Alibaba risks deepening $100 billion rout as turf war heats up"},"content":{"rendered":"\n<p>A protracted battle in China\u2019s food-delivery market has chopped $100 billion in market value from Alibaba Group Holding Ltd., with no end in sight for damage to profits and investor confidence.<\/p>\n<div>\n<p>Its Hong Kong-listed shares plunged 28% from a March high through Thursday, nearly double the loss in a gauge of Chinese tech peers. Rivals JD.com Inc. and Meituan have dropped by similar measures amid daily headlines on government efforts to contain the destructive hyper-competition being dubbed \u201cinvolution\u201d.<\/p>\n<p>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.<\/p>\n<p>\u201cIt could last longer than expected,\u201d said Luo Jing, investment director at Value Partners Group Ltd. in Hong Kong. \u201cThe players are financially stronger than in the previous round, with more cash and better cash flow positions.\u201d<\/p>\n<p>Alibaba\u2019s 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. The company has merged its delivery unit into its core business and boosted subsidies since JD.com\u2019s formal\u00a0<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-02-28\/jd-com-profits-seen-pressured-by-looming-new-fight-with-meituan\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Go to https:\/\/www.bloomberg.com\/news\/articles\/2025-02-28\/jd-com-profits-seen-pressured-by-looming-new-fight-with-meituan\" class=\"sc-19cc8fd2-0 iHosVH\">entry<\/a>\u00a0to the space in February.<\/p>\n<p>It\u2019s a costly fight. Nomura Holdings Inc. estimates about $4 billion has been burned on discounts in the June quarter alone by Alibaba, Meituan and JD.com. It sees Alibaba dictating the intensity and scale of the coupon war going forward.<\/p>\n<p>Sector leader Meituan said Saturday that it was going into \u201cattack\u201d mode versus Alibaba, while JD.com announced a new incentive scheme this week. The companies\u2019 extreme moves have drawn much criticism from the government over the potential disastrous impact to the industry, as well as warnings on driver health and food safety.<\/p>\n<p>Alibaba might sustain a loss of 41 billion yuan ($5.7 billion) in its food-delivery business for the 12 months through next June, according to Goldman Sachs, equal to about a third of its net income for the fiscal year ended March.<\/p>\n<p>\u201cAggressive investment in food delivery, insta-shopping will meaningfully damp its near-term earnings outlook,\u201d HSBC analysts including Charlene Liu wrote in a note this week, cutting their price target for Alibaba by 15%.<\/p>\n<p>The consensus estimate for Alibaba\u2019s 12-month forward earnings per share is down about 6% since early May. Analysts are still overwhelmingly bullish, with 44 buy ratings on the Hong Kong shares and no holds or sells. The stock also remains historically cheap at a price-to-earnings ratio of less than 11 times.<\/p>\n<p>In terms of uspide risks, UOB Kay Hian Holdings Ltd. analyst Julia Pan notes that the government may\u00a0<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-07-10\/xi-signals-china-may-finally-move-to-end-deflationary-price-wars\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Go to https:\/\/www.bloomberg.com\/news\/articles\/2025-07-10\/xi-signals-china-may-finally-move-to-end-deflationary-price-wars\" class=\"sc-19cc8fd2-0 iHosVH\">step in<\/a>\u00a0to curb price competition if the market takes a heavy blow and margins get squeezed further. Alibaba\u2019s current valuation is low enough to trigger some dip buying, she added.<\/p>\n<p>The stock climbed as much as 3.5% Friday amid a broad rally in Hong Kong.<\/p>\n<p>But investors may remain cautious until a definitive end to the steep discounts, especially if they trigger more earnings downgrades and constrain investment in all-important AI business.\u00a0<\/p>\n<p>\u201cWe do need to watch for price competition that evolves into a situation where certain companies decide to gain market share at the expense of profitability,\u201d said Nicholas Chui, a Franklin Templeton portfolio manager. \u201cAs a stock picker, we would avoid those stocks.\u201d\n<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>A protracted battle in China\u2019s food-delivery market has chopped $100 billion in market value from Alibaba Group Holding Ltd., with no end in sight for damage to profits and investor confidence. Its Hong Kong-listed shares plunged 28% from a March high through Thursday, nearly double the loss in a gauge of Chinese tech peers. Rivals [&hellip;]<\/p>\n","protected":false},"author":826,"featured_media":15860,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[],"class_list":["post-15859","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Alibaba risks deepening $100 billion rout as turf war heats up | Unlock Informed Choices with Us<\/title>\n<meta name=\"description\" content=\"Alibaba\u2019s food-delivery strategy has distracted investors away from the DeepSeek-led AI boom that drove shares up more than 80% in just two months.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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Yu, Bloomberg","author_link":"https:\/\/topat10.com\/?author=826"},"uagb_comment_info":2,"uagb_excerpt":"A protracted battle in China\u2019s food-delivery market has chopped $100 billion in market value from Alibaba Group Holding Ltd., with no end in sight for damage to profits and investor confidence. Its Hong Kong-listed shares plunged 28% from a March high through Thursday, nearly double the loss in a gauge of Chinese tech peers. Rivals&hellip;","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts\/15859","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/users\/826"}],"replies":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15859"}],"version-history":[{"count":0,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts\/15859\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/media\/15860"}],"wp:attachment":[{"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15859"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15859"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15859"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}