On Nov. 22 Meituan-Dianping, China’s on-demand service provider, released its first earnings report after raising $4.2 billion in an IPO in September. Its third quarter operating loss soared to $497.46 million, that means it tripled from last year’s $151 million for the same time period.
According to the earnings release, Meituan-Dianping’s Q3 revenue managed to hit a total of $2.75 billion, marking a year-on-year increase of 97.2 percent. Revenue from food delivery reached $161 million, increasing by 84.8 percent year-on-year. Travel services brought in a revenue of $634 million, a year-on-year increase of 46.8 percent.
The online food delivery giant attributed the revenue growth to rising user numbers and increasing transaction volumes. However, higher costs for payment processing and delivery riders resulted in its operating loss.
In addition, the company booked a net loss of $12 billion in one quarter, a significant jump from $634 million during the third quarter last year, which was caused by changes in the fair value of convertible redeemable preferred shares according to the company.
The so-called “app for everything”, raised a $4.2 billion IPO in September after pricing the shares at HK$ 69 near the top of its target range, giving it a valuation close to $53 billion. It closed at HK$ 61.05 per share on Thursday, making its market value of about $37 billion. The slowing economy and sapped investor confidence due to the trade war between China and the US might have contributed to the drop in the share price.
The Tencent-backed company has been in throat-cut battles with Alibaba-backed Ele.me, which is costly for both sides. But Meituan CEO Wang Xing said that he’s optimistic about the food service industry and expects future growth in the food and beverage sector.
Featured photo credit to itech.ifeng.com