(ATF) Shares of Chinese online giant Meituan fell for a fourth straight day on Thursday amid a run of bad headlines that included the chief executive posting an ancient poem viewed as criticism of the government.
Meituan’s Hong Kong-listed shares closed 1.4% lower on Thursday at HK$251.60 – and down 9% in a week – as investors bet it would become the next big Chinese tech company humbled by government regulators.
Beijing has moved aggressively to loosen internet giants’ hold on the daily finances of consumers and – analysts believe – to curb the sector’s growing influence on society by using anti-monopoly probes.
Regulators hit e-commerce titan Alibaba, co-founded by billionaire entrepreneur Jack Ma, with a record $2.78 billion fine last month for abusing its market dominance with anti-competitive practices.
Two weeks ago regulators said they had also launched a similar probe of Meituan, a consumer lifestyle super-app through which users order consumer goods and book food, entertainment, health and leisure services.
TYRANNICAL RULE
Resulting pressure on Meituan shares turned into a rout after chief executive Wang Xing posted a classic ancient poem on social media last week about the tyrannical rule of China’s first emperor, which was widely viewed as a swipe at authorities.
Wang quickly deleted the post and has said it was mistakenly interpreted. Insiders have said it was a blast at competitors, not authorities.
Shares of Meituan, which is backed by Chinese tech giant Tencent, had surged since it listed in Hong Kong in 2018, vaulting it into the ranks of the country’s most valuable tech companies.
Meituan has vowed to present authorities with a “rectification” plan to address what China’s national market watchdog has called “suspected monopolistic behaviours”.
‘CREDIT NEGATIVE’
“If the investigation results in confirmation of Meituan’s anti-competitive behaviour, it will be credit negative for the company,” rating agency Moody’s said.
“This is because any potential penalty and mandated changes are likely to slow Meituan’s revenue growth or raise its operating costs, or both.”
Critics have also questioned the company’s treatment of its employees. The company does not pay social insurance for its part-time delivery riders.
“Social insurance is a hot topic of discussion in the food delivery sector,” Thomas Chong, an equity analyst at Jefferies, said.
Meituan uses more than 1 million active riders, of which about half are full time. Part-time riders are needed due to volatility in order demand during peak hours and at events.
With reporting by Agence France-Presse
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