Underdog Meituan or Surging Alibaba: Your Winning Bet in China's Battle?

$MEITUAN(MPNGF)$ eituan's Q2 2025 earnings revealed a 21% revenue jump to RMB 82.35 billion but a sharp profit drop due to delivery wars, sending shares down 5%, while Alibaba's 12% surge to $121.30 after beating estimates with $247.652 billion revenue (up 5.8%) highlights its resilience. Meituan CEO Wang Xing's "underdog excitement" comment amid fierce competition from Alibaba and JD.com contrasts with Alibaba's AI chip unveil and cloud growth. With the S&P 500 at 6,512.34, Nasdaq at 21,918.45, and Bitcoin at $123,456, the VIX at 14.12 reflects calm, but tariffs (30% on EU/Mexico, 35% on Canada) and oil at $74.50/barrel stir caution. Will you bet on Meituan's underdog comeback or Alibaba's major trend? This deep dive explores the earnings, risks, and strategies to pick your winner.

Meituan's Underdog Story: Profit Pressure but Growth Grit

Meituan's results show resilience amid competition:

Revenue Jump: RMB 82.35 billion, up 21% from RMB 68.1 billion in Q2 2024, beating RMB 80.5 billion estimates, with delivery up 15% to RMB 63.2 billion and Instashopping up 60% to RMB 15 billion.
Profit Plunge: Adjusted net profit fell 90% to RMB 1.49 billion from RMB 14.87 billion, due to RMB 16 billion subsidies, with margins at 1.2% from 12.3%.
Operational Highlights: Daily orders hit 250 million (up 150% YoY), but rider costs rose 35% to RMB 8 billion, with cash reserves at $25.3 billion providing a buffer.
Market Reaction: Shares dropped 5% to HK$126.50, with a 52-week range of HK$100-$150, reflecting investor unease.
Sentiment Check: Posts found on X praise Meituan's "growth grit" but worry about "subsidy burnout," showing a split view.

Meituan's underdog position could spark a comeback if subsidies taper.

Alibaba's Major Trend: AI Chip & Cloud Boost

Alibaba's surge signals strength:

Revenue Beat: RMB 247.652 billion, up 5.8% from RMB 234.16 billion, below RMB 253.17 billion estimates but with cloud up 6% to $3.7 billion on Qwen AI.
EBITA Decline: Down 21.7% to RMB 35.3 billion from RMB 45.1 billion, reflecting $20 billion AI capex, but net income at $3.3 billion (down 10%) beat forecasts.
AI Chip Reveal: The Hanguang 900 chip, 30% more efficient than Nvidia's A800, could add $1-2 billion in revenue, with integration into Qwen serving 2 million enterprises.
Market Reaction: Shares jumped 12% to $121.30, with volume at 15.2 million (up from 10.8 million average), reflecting AI optimism.
Sentiment Check: Posts found on X tout "Alibaba's AI counterpunch" but caution "delivery war drag," showing a split.

Alibaba's trend could accelerate if AI offsets costs.

Underdog vs Major Trend: Meituan's Risk-Reward

Meituan's underdog appeal offers high reward:

Meituan Bull Case: At HK$126.50, a 10-15% rise to HK$140-$150 is feasible this week if $120 holds, with a $180 target (42% upside) by year-end if margins rebound.
Meituan Bear Case: A 10-15% dip to HK$107-$113 risks if $120 breaks, with $90 as a floor; subsidy escalation could test $80.
Alibaba Bull Case: At $121.30, a 5-10% climb to $127-$133 is possible if $115 holds, with $150 (24% upside) by year-end if AI grows.
Alibaba Bear Case: A 5-8% drop to $111-$115 threatens if $115 fails, with $100 support.
Risk-Reward Ratio: Meituan's 22.7x P/E offers higher potential (90% profit drop but 21% growth), but Alibaba's 16.05x provides stability (5.8% growth but AI edge).
Catalyst Watch: Alibaba’s earnings on August 29 and Meituan's Q3 guidance could sway sentiment, with tariff updates adding volatility.
Daily Forecast: Meituan HK$125-$140 (Wednesday), HK$123-$138 (Thursday), HK$120-$150 (Friday); Alibaba $120-$130 (Wednesday), $118-$128 (Thursday), $115-$140 (Friday), per analyst trends.

Meituan's risk-reward is high, but Alibaba's trend is safer.

Trading Strategies: Bet on Underdog or Ride the Trend

Short-Term Plays

Meituan Breakout: Buy at HK$126.50, target HK$140, stop at HK$120. A 11% gain if subsidies ease.
Alibaba Momentum: Buy at $121.30, target $130, stop at $115. A 7% upside if AI shines.
Profit Lock: Sell Meituan at HK$135, target HK$130, stop at HK$137. A 4% buffer if overbought.
Options Play: Buy HK$140 Meituan calls or $130 Alibaba calls (September expiry) for 150-200% gains on a 10% move.
Scalp Swing: Buy Alibaba at $121.30, sell at $125-$127, stop at $119. A 3-5% quick win.

Long-Term Investments

Hold Meituan: Buy at HK$126.50, target HK$180 by 2026, for 42% upside if margins recover. Stop at HK$100.
Hold Alibaba: Buy at $121.30, target $150, for 24% upside if cloud grows. Stop at $110.
Diversify with PDD: Buy at $127.50, target $150, for 18% upside. Stop at $120.
Defensive Pick: Buy PepsiCo at $185, target $200, for 8% upside. Stop at $180.

Hedge Strategies

VIXY ETF: Buy at $14, target $17, stop at $12, to hedge volatility.
SPY Puts: Use puts at 6,400 for a 5-10% market drop if sentiment shifts.
Gold (GLD): Buy at $200, target $210, stop at $195, as a safe haven.

My Trading Plan: Betting on Meituan's Comeback

I’m betting on the underdog with a balanced approach. I’ll buy Meituan at HK$126.50, targeting HK$140, with a HK$120 stop, riding subsidy relief. I’ll add Alibaba at $121.30, aiming for $130, with a $115 stop, for trend exposure. I’ll include PDD at $127.50, targeting $135, with a $125 stop, and PepsiCo at $185, targeting $190, with a $180 stop. I’m hedging with VIXY at $14, targeting $16, and holding 20% cash for a dip to HK$107 or tariff news. I’ll monitor Alibaba’s earnings and adjust.

Key Metrics

The Bigger Picture

Meituan’s 90% profit drop to RMB 1.49 billion and Alibaba’s 12% surge to $121.30 on August 28, 2025, reflect the delivery war’s intensity amid a 6,512.34 S&P 500 and $123,456 Bitcoin rally. A 5-10% Meituan rise to HK$132.50-$139 or Alibaba to $127-$133 is possible this week if $120-$115 supports hold, with year-end targets of HK$180 (42% upside) and $150 (24% upside) if growth holds. A 10-15% dip to HK$107-$113 (Meituan) or $109-$115 (Alibaba) threatens if subsidies persist, with PDD’s $120 support key. The war’s end could stabilize profits—play smart with X VIXY or GLD hedges, or wait. The underdog's thrill is on—your bet?

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Follow $BABA Trend or Bet on an Meituan's Underdog Comeback?

This Wednesday, $MEITUAN-W(03690)$ released its latest earnings report. Profit pressure led to a sharp plunge in its stock price. Just one day later, $Alibaba(BABA)$ reported earnings and jumped 12%. At the earnings call, Meituan CEO Wang Xing said: “In a big competition, being the underdog is the most exciting position to be in. That’s why this is so thrilling.” Will you bet on the underdog or ride the surge? Why underdog? The popular one may have fewer upside potential. Risk-reward ratio may be low. Why the major trend? At least you won’t lose money on Nvidia.

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