Meituan CEO’s Net Worth Poised to Top $7 Billion as Shares Surge
Meituan Revenue Beats Estimates on Expansion Beyond Food
(Bloomberg) -- The founder of China food-delivery giant Meituan Dianping is having a very good year.
As his business has grown, Chief Executive Officer Wang Xing’s net worth doubled this year through Thursday’s close to $6.7 billion, according to Bloomberg Billionaires Index. That figure is likely to top $7 billion as Meituan’s stock surged Friday, following a strong earnings report.
Shares climbed as much as 13%, the most intraday since its IPO last year, and traded 8% higher at 11:45 a.m. Meituan reported quarterly revenue that increased 44% to 27.5 billion yuan ($3.9 billion) in the three months ended September, compared with the 26 billion yuan average of analysts’ estimates. Net income hit 1.33 billion yuan, including gains from investments, while analysts projected a 502 million yuan loss.
Backed by Tencent Holdings Ltd., Meituan is investing heavily in a plethora of online services from food delivery to travel, competing directly against Alibaba Group Holding Ltd. CEO Wang is trying to sustain a robust pace of growth by expanding into newer arenas such as ride-hailing, restaurant management and online groceries. That ambitious expansion has helped Meituan overtake the likes of Baidu Inc. to become China’s third largest publicly traded tech company.
On a conference call after the earnings, executives said they will continue to invest in new areas like hotel booking and grocery services. The goal is to create a one-stop app for services, similar to the platforms Alibaba and Amazon.com Inc. have built for products.
What Bloomberg Intelligence Says
Meituan is seizing order share across segments. Growth in hotel room nights outpaced the industry and Meituan wants to expand into high-end facilities next year.
- Vey-Sern Ling and Tiffany Tam, analysts
Click here for the research.
While Meituan has tightened its belt with less-profitable areas such as bike-sharing, it’s spending at a rapid clip to fend off Alibaba’s Ele.me in meal delivery and Fliggy in travel, an enormous outlay that’s compressing margins. Sustaining growth has also become a stiffer challenge as Chinese economic growth threatens to slide beneath 6%. Longer-term, Wang envisions a super-app modeled on Tencent’s own WeChat, extending a raft of everyday services such as payments to an increasingly wealthy populace.
Meituan’s stock has more than doubled in 2019 -- easily outpacing Alibaba and Tencent -- as investors bet on its ability to safeguard its share of China’s fastest-growing internet services.
--With assistance from Pei Yi Mak and Venus Feng.
To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.net
To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan
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