Meituan earnings may signal a cooling China’s e-commerce price war; here’s why

Meituan's Q2 earnings report has revealed a notable turnaround in China's e-commerce sector, with the company posting an EPS of $0.41, significantly surpassing the $0.01 estimate. This represents a remarkable 2,706% increase from the previous quarter. Notably, Meituan's net margin has improved from -7.5% to +2.1%, signaling a potential end to the prolonged price war that had been eroding margins for a year.

Prior to this turnaround, Meituan had reported four consecutive quarters of net losses, with margins plummeting to -19.5% in Q2 2025. The company's revenue grew by 16.5% sequentially to ¥104.6 billion, and its gross margin increased to 33.5%, closely resembling pre-war levels. These developments suggest that competitors are also easing their subsidy-driven pricing strategies.

JD.com corroborates this trend, as its net margin has peaked near the losses of Jingxi, its discount marketplace. Conversely, Alibaba appears to be investing in the future, despite a compressed gross margin and net margin, as it allocates funds towards AI and data center infrastructure. While Alibaba's valuation is higher, trading at 18.5x forward earnings, Meituan trades at a negative forward P/E, indicating that market participants remain cautious about the company's immediate profitability despite the Q2 earnings success.

The upcoming Q3 earnings cycle (October-November 2026) will provide further clarity on whether the e-commerce sector's price war is truly waning.