Alibaba Group has lost approximately $100 billion in market value as its food-delivery unit Ele.me engages in a fierce price war with Meituan and JD.com. The company’s Hong Kong-listed shares have dropped 28% from their March peak—nearly double the fall seen by its tech peers
Deep Subsidies Driving Massive Losses
Goldman Sachs reports that Alibaba is likely to incur ¥41 billion (US $5.7 billion) in losses over the next 12 months in its food delivery business alone. Meanwhile, across the sector, coupons worth ¥25 billion were distributed in just the recent quarter
Competitors Dig In, Government Voices Concern
Meituan has adopted an “attack” strategy with aggressive pricing, and JD.com has launched its own discount campaigns to gain share in instant retail and delivery. These moves have drawn criticism from authorities wary of “involution”—unsustainable price wars harming drivers, merchants, and long-term industry health
Broader Financial and Strategic Impacts
- Earnings Pressure: HSBC warns that deep discounts will significantly weigh on Alibaba’s near-term profits, prompting an 8–15% cut in price targets by multiple brokers
- Corporate Focus Shift: Funds channeled into subsidies for delivery have diverted attention from Alibaba’s core AI initiatives like DeepSeek, which had previously boosted the stock
- Investor Watch: Despite the losses, analysts remain positive due to Alibaba’s low valuation—trading below 11× forward P/E and supported by strong buy ratings
What Comes Next?
Unless regulators intervene, the price war could persist, further pressuring margins. Yet, the shakeout may benefit resilient players. Analysts believe that with subsidy spending flattening and a rebalancing of focus to high-growth segments like AI and cloud, Alibaba could recover in the mid-term.
Summary
Alibaba has seen around $100 billion wiped from its market value due to an escalating food delivery price war. Heavy subsidy spending and declining short-term profitability have alarmed investors, even as analysts consider the current valuation a potential buying opportunity.
