Why Meituan (SEHK:3690) Is Down 13.6% After Strong Revenue Growth But Sharply Lower Earnings

• Meituan recently released its earnings results for the second quarter and first half of 2025, reporting sales of CNY 91.84 billion for the quarter and CNY 178.40 billion for the half year, both up compared to the previous year, while net income declined significantly to CNY 365.3 million and CNY 10.42 billion, respectively.
• This combination of higher revenues alongside substantially reduced profits highlights the company’s current struggle to maintain profitability despite top-line growth.
• We’ll assess how Meituan’s strong revenue momentum but sharply lower earnings reshape its broader investment narrative and future prospects.

Find companies with promising cash flow potential yet trading below their fair value.

Meituan Investment Narrative Recap

To be a Meituan shareholder today, you’d need to believe in the company’s ability to convert its robust revenue growth, reflected in rising sales year-over-year, into sustainable long-term profitability. The recent Q2 results, with sales increasing but net income dropping sharply, make the biggest short-term catalyst, restoring operating margins, more difficult, while the principal risk of margin compression from rising costs becomes more immediate and visible.

Among recent announcements, Meituan’s planned international push through the Keeta expansion into Brazil is particularly relevant given the current earnings release. This move highlights ongoing investment in new growth avenues, which could impact near-term profitability but may be important for diversifying future revenue streams if core markets slow.

Yet, while revenue momentum is encouraging, the evolving risk from intense competition and growing fixed costs is something investors should keep top-of-mind as...

Read the full narrative on Meituan (it's free!)

Meituan's narrative projects CN¥508.8 billion in revenue and CN¥55.5 billion in earnings by 2028. This requires a 13.2% yearly revenue growth and a CN¥15.0 billion earnings increase from the current earnings of CN¥40.5 billion.

Uncover how Meituan's forecasts yield a HK$164.77 fair value, a 64% upside to its current price.

Exploring Other Perspectives

Retail investors in the Simply Wall St Community place Meituan’s fair value between HK$117.15 and HK$227.92, based on 9 distinct forecasts. These varied opinions stand in stark contrast to the current concern that growing customer incentives and operational costs could threaten Meituan’s margin recovery and overall earnings potential, highlighting the importance of exploring several viewpoints.

Explore 9 other fair value estimates on Meituan - why the stock might be worth just HK$117.15!

Build Your Own Meituan Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Meituan research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Meituan research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Meituan's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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