The market value has lost more than HK $1.2 trillion in three months. what happened to Meituan?

What happened?

Meituan's shares fell sharply at the start of trading on Tuesday, May 11, falling more than 8 per cent at one point in intraday trading and narrowing to about 5 per cent in the afternoon. By the end of the day, Meituan was down 5.25% to HK $249.

Meituan has fallen for 10 consecutive trading days since April 28, with a cumulative decline of more than 20 per cent.

What is more noteworthy is thatMeituan, the fourth-largest company in Hong Kong by market capitalization, has fallen more than 45 per cent from its peak of HK $460 reached in February this year, and its market capitalization has lost more than HK $1.2 trillion.

What's the reason?

Why does Meituan's share price continue to decline? According to China Finance and EconomicsThis may be related to Meituan's recent interview and investigation.

First, on April 26th, the General Administration of Market Supervision said it had filed an investigation into Meituan's suspected monopoly practices such as "choosing one of the two" in accordance with the law.

Then, on April 29th, according to Xinhua View, the people's Bank of China, Banco Insurance Regulatory Commission, Securities Regulatory Commission, safe and other financial management departments jointly conducted regulatory interviews on some network platform enterprises engaged in financial business. Pan Gongsheng, deputy governor of the people's Bank of China, presided over the interview, and actual controllers or representatives of 13 network platform enterprises, including Meituan Finance, participated in the interview.

On May 10th, the Shanghai Consumer Protection Commission said that it had interviewed Meituan and pointed out Meituan's outstanding problems in the protection of consumers' rights and interests. Meituan's main problems are: the first is the refund caused by the cancellation of the order; the second is the non-performance of ordering and delivering meals and fresh vegetables; and the third is the problem of misleading consumers on the page.

The Shanghai Consumer Protection Commission requires Meituan to abandon the flow-only thinking in the course of operating the platform, and to truly implement the main responsibility of the platform from the perspective of protecting the legitimate rights and interests of consumers: first, to improve the page description and service rules, especially the important contents related to consumers' rights and interests should be prompted to consumers in a significant way. The second is to earnestly fulfill the obligations of the order, and if the accommodation, ticketing and other agreements cannot be fulfilled due to special circumstances, the platform should also take the initiative to contact the consumers to negotiate the solution; the third is to fairly set the agreement and charges with the platform merchants, not to rely on the dominant market position to increase the unreasonable burden on merchants and consumers; fourth, to strictly enforce the timeliness of logistics and distribution, to ensure that orders are delivered in place in time, and to put an end to false signing. Fifth, it is necessary to timely study and solve the new problems related to the legitimate rights and interests of consumers encountered in the new business such as community group buying, optimize the business model, and form norms for the protection of the rights and interests of community group buying consumers.

Meituan said that the company will conduct self-inspection and purge of its related business in accordance with the requirements of the Shanghai Consumer Protection Commission, and will submit a rectification report to the Consumer Protection Commission in the near future.

In addition to the above reasons, Meituan announced on April 20 that it planned to seek to raise nearly $10 billion by issuing additional shares and selling convertible bonds. Of this total, the US $7 billion placement of new shares set a record for Hong Kong shares.

therefore,The rights issue has led to a big increase in the supply of shares in the market, which is also a major factor under pressure on Meituan's valuation and share price.

The employment problem has become the focus.

In addition, the employment issue of Meituan has become the focus recently, and the company has made it clear that it will gradually abolish the order-by-order punishment for knights.

In addition, according to 36Kr Holdings, Meituan also recently adjusted its distribution rules, subdividing the original performance service fee into three parts: distance, price, and period of time, and charging according to the distance and price, which is similar to turning on the taxi meter, while the percentage of the original performance service fee is fixed.

It is understood that under such a cut rule, the percentage of sellers with high price at close range has significantly decreased, while the percentage of takeout for low customers from a long distance has increased significantly, some even exceeding 90%. The rule will be implemented in all cities directly operated by Meituan takeout from May 1.

For Meituan to outsource riders rather than hire regular workers, some institutions further analyzed that if Meituan paid social security in 2020, he estimated that the profit he would have to give back would be 10 billion yuan. As a result, Meituan's share price will go down about 40-50 Hong Kong dollars directly in its discount model.