Chinese food delivery company Meituan (3690) dived by as much as 9 percent yesterday - the most in two months - after Douyin started a trial of a food delivery operation to challenge it.
Still, Meituan has just unveiled plans to hire as many as 10,000 people this quarter as it tries to fend off the challenge from the ByteDance-related Douyin, which is testing a grocery and food delivery service in Beijing, Shanghai and Chengdu.
It is considering expanding the trial to more cities, though it does not have a timetable to roll out the service nationally.
"Douyin seems to be expanding its ambition beyond cooperation with [Alibaba delivery operation] Ele.me and wants to do it nationwide," said Willer Chen, a senior research analyst at Forsyth Barr Asia. "This will lead to more head-to-head competition between Meituan and Douyin."
If Douyin forges ahead with full-fledged delivery services it could re-ignite a money-sapping, 12-month-long battle for control of the delivery market before Beijing began to crack down on "reckless expansion of capital."
Meituan, which continues to report losses, saw revenue surge 28 percent in last year's third quarter as demand held up during the downturn. China's reopening is expected to spur economic activity and benefit Meituan in the longer run.
Meituan closed at HK$153 yesterday, about 6.5 percent lower than on Tuesday.
