Goldman Sachs prediction: The key controversy about Meituan in the market is shifting to “how much of its moat remains?”
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Goldman Sachs believes that for investors tracking Meituan, it is now essential to understand a core shift: the market’s debate is no longer about “when will the losses peak,” but rather the more profound question of “how much moat does Meituan have left?”
According to Windchaser Trading Desk, on December 1st, Goldman Sachs released its latest report, maintaining its “Buy” rating on Meituan but lowering the target price to HKD 120, reflecting concerns on long-term profit margins. The core of the analysis lies in three scenarios: base case (+17% upside), bull case (+48%), and bear case (–25%), clearly outlining the risk and return for investors at the current price. Short-term profit pressure is a fact, but Meituan’s long-term leadership, gradually recovering profitability, and new business growth are key reasons for Goldman Sachs’ maintained “Buy.”
Core shift in debate: The market focus has shifted from short-term subsidy wars in food delivery to evaluating Meituan’s defensive strength and long-term profit potential in a war of attrition against strong competitors like Alibaba (through Ele.me “Kuaisong”) and Douyin (in-store business).Performance vs. expectations: Meituan’s Q3 loss was better than expected, but management’s guidance for continued substantial losses in food delivery in Q4, margin pressures due to competition in in-store business, and sustained investments in instant retail and overseas markets, have all triggered market concerns.Bull vs. bear debate: Bulls believe Meituan, with its high-quality user base and ample cash reserves, can win in this war of attrition; bears worry that if rivals are willing to sustain long-term losses, Meituan’s margins will keep being suppressed, and history could repeat, as with e-commerce industries disrupted by new entrants.
Mixed results, but positive signals emerging
Goldman Sachs notes that Meituan’s adjusted operating loss for Q3 was RMB 17.5 billion, better than Goldman’s expected loss of RMB 18.8 billion. Losses narrowed better than expected in instant retail and new businesses.
Nonetheless, the initial market response was negative, mainly due to Meituan’s cautious commentary on the future. However, Goldman highlights several positive signals that should not be ignored:
Instant retail losses have peaked: Q3 was the loss peak. With reduced subsidy intensity after “Double 11”, losses in Q4 and Q1 next year are expected to narrow.Leading unit economics: Thanks to scale and a high-quality user base, Meituan has kept high efficiency even in the subsidy war. Goldman estimates Meituan lost about RMB 2.6 per order in Q3, compared to RMB 5.2 per order for Alibaba’s “Kuaisong.”Clear overseas profit path: Its overseas brand Keeta launched in Hong Kong in May 2023, reaching monthly profitability in October 2025—just 29 months—exceeding the original timeline and demonstrating strong execution.
Base Case: Leadership intact but profit expectations lowered (+17% upside)
Goldman’s base case, which underpins its HKD 120 target price, is built on the following core assumptions:
Lower long-term food delivery profits: While Meituan should maintain leadership in China’s local services, facing a much stronger second competitor (Alibaba “Kuaisong”), its long-term per-order EBIT (earnings before interest and taxes) is revised from RMB 0.8 to RMB 0.7.In-store business margins under pressure: Due to competition from Douyin and Amap, long-term profit margins for the in-store, hotel, and travel (IHT) business are lowered from 30% (company objective) to 27%.Market share to recover: Goldman believes as irrational subsidy wars (estimated Q3 industry-wide losses at RMB 70 billion) normalize, Meituan can recapture some lost market share in low-ticket orders. Its strategy is to protect high-value users, aiding improved ROI and user lifetime value.Undervalued potential: The market may underestimate Meituan’s growth potential in instant retail (1P+3P model) and globalization (e.g. Keeta).
Bull Case: Impenetrable moat and ample capital (+48% upside)
For a bullish valuation of HKD 152, the following conditions need to be met:
Moat strong enough: Even in the most intense Q3 competition and at peak losses, the No.2 player could not substantially shake Meituan’s core user base or top market position. This proves its first-mover advantage and strong user experience barriers.Capital strength overwhelming: Meituan’s net cash can sustain a long battle, causing major stress to competitor financials. Goldman points out, in Q3, Meituan’s instant retail daily loss was about RMB 200 million; for Alibaba’s “Kuaisong,” about RMB 400 million daily, putting huge pressure on Alibaba Group’s profits.Competitors may pivot strategies: Some investors believe Alibaba may ultimately shift subsidies back to its core e-commerce business (to counter Douyin E-commerce’s rise), or to more strategic AI domains, rather than continuing to bleed cash in “Kuaisong.”
Bear Case: Prolonged loss across battle fronts (–25% downside)
If the share price falls to HKD 77, it could be triggered by the following risk factors:
Competitors keep burning cash: If Alibaba finds that “Kuaisong” drives enough cross-sales to its core e-commerce (Taobao-Tmall), it may be willing to sustain losses long-term, keeping Meituan’s food delivery and in-store profits suppressed for an extended period.Shrinking per-order profit gap: Signs show Meituan’s unit economics edge over Alibaba’s “Kuaisong” is narrowing. Goldman predicts the per-order profit gap could fall from RMB 2.6 in September to RMB 1.3 in December. If this trend continues, it poses a severe threat to Meituan’s food delivery long-term valuation.In-store business repeats e-commerce’s fate: Investors worry Meituan’s in-store, hotel, and travel (IHT) business could take the same path as e-commerce—where former leaders (like Taobao-Tmall) lose long-term share and margins to newcomers. Douyin’s local services GTV reportedly grew 60% this year to RMB 800 billion, while Goldman estimates Meituan IHT’s GTV grew 24% to RMB 1.2 trillion—competition is fierce.AI platform disruption risk: If AI applications from Alibaba (Tongyi Qianwen/Quark) or ByteDance (Doubao) evolve into super apps providing local services and broad consumption, the prevailing vertical-app dominated market pattern could be disrupted.
Goldman Sachs believes that despite Meituan’s unprecedentedly fierce competition and short-term profit pressures, its leading core business, strong execution, and already sharply adjusted share price mean it still has investment value at current levels. The key for the future will be whether Meituan can prove the depth and resilience of its “moat” across multiple competitive fronts.
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The above content is from Windchaser Trading Desk.
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