Chinese food delivery firm Meituan hits record high of $100 billion

The Chinese food delivery company, Meituan Dianping’s shares, hit its highest stock rate today. Company shares went up to $100 billion, which is a few of the highest stock rates among many industry giants and companies.

It is a Hong Kong-listed firm and is third in the list to hit a record high, which is this huge. After Tencent and Alibaba touched at such rates, Meituan is third. Tencent reached this record high in 2013, whereas Alibaba did so in 2014. Most of Meituan’s revenue is generated from its food delivery business. It also has smaller segments of business in the travel and transportation industries. The food delivery industry is currently producing huge profits for the Chinese food delivery giant.

Funded by Tencent, Meituan Dianping’s share went up to $138(HK), which is equal to $17.8, this Tuesday after bringing out its revenue data for quarter 1. A noticeable fact is that the loss incurred in the revenue for this quarter is relatively lower than what was initially expected, which is comparatively better news.

As the lockdowns began, most industries saw a drastic fall in the availability of customers. During COVID 19, daily mean transactions, even for Meituan, took a huge fall. It fell to 15.1 million, which is a loss of approximately 18.2% for the firm. On the better side, the value per order went up for a lot of reasons. It saw an increase of about 14%. It may have been the outcome for various reasons. The nationwide lockdown has increased the number of home delivery orders since going out to eat is no longer a viable option. Big premium restaurants have joined Meituan to keep their businesses running and the food orders are coming in. 

A large percentage of the regular customers were office goers who ordered their daily lunches and dinners via Meituan. The daily orders have seen a significant rise in the order sizes due to orders being placed by families. Thus the order sizes are bigger.

Shares of Meituan saw a fall in prices in Q1 due to COVID 19, after three successive profitable quarters. The increase in prices has come as a relief to Meituan.

The company has allotted subsidies to its partner vendors to support them through the dying markets. They also sent out incentives to their delivery boys and other employees for working during such tough times.

Chinese customers have noticeably held back on spending on unessential items amidst this drowning economy worldwide. As suggested by the government, a lot of people have resorted to working from home. They have also started to make their break time tea, or coffee, which they would have just ordered earlier. Such small changes in customer behaviors have led to an immense fall in businesses in most industries. Such initiatives will, without a doubt, help in decreasing the chances of spreading the virus.

Image source: Techcrunch

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