China’s Meal Delivery Service Meituan Now Valued At $100Bby PYMNTS
Hong Kong’s Meituan, a food delivery service, hit a valuation of $100 billion on Tuesday (May 26) as shares soared, according to TechCrunch.
Meituan is now only the third Chinese firm to achieve that high of a value. Tencent and Alibaba are the others.
Shares rose to $138 Hong Kong dollars ($17.80) following a decrease in the first quarter that wasn’t as sharp as the company predicted, and a net loss of 1.58 million yuan ($221,000) after three profitable quarters in a row.
Meituan focuses on food delivery as well as smaller operations in travel and transportation, according to TechCrunch.
The company has seen a downturn in overall transactions amid the coronavirus pandemic as people save money due to the worsening economy. The number of transactions have fallen 18.2 percent on average.
Due to the lagging economy, Meituan has still found itself paying incentives to drivers to work during the pandemic as well as subsidies to merchants to keep things running.
“Moving on to the remaining of 2020, we expect that factors including the ongoing pandemic precautions, consumers’ insufficient confidence in offline consumption activities and the risk of merchants’ closure would continue to have a potential impact on our business performance,” the company said, according to TechCrunch.
There has been an upside though. People have been ordering larger amounts of food from Meituan to feed the whole family at home during the pandemic, rather than ordering small amounts to eat while they work in an office. The average amount paid rose 14.4 percent.
Additionally, the company saw an influx of premium restaurants joining its services in the first quarter as the pandemic was in full force earlier this year, anticipating that as the best way to continue to make money.
In March, Meituan also got into the practice of delivering paper “shields” to help customers distance and defend from the virus.