Meituan’s current dilemma and how to overcome it

Meituan has just released its financial report, so let’s talk about some of its latest views and understandings.

I won’t go into details about the relevant performance, especially when compared with Pinxixi, the company next door, it is simply a dimensionality reduction blow.

The current market has formed a strong consensus on Meituan, which mainly involves the following difficulties:

1. There is a ceiling problem, especially compared to Temu, which has good growth prospects for Pinduoduo;

2. Long-term competition with Douyin will damage profits, including but not limited to the development of Kuaishou’s local life business;

3. The concepts and propositions of Infinite Warfare, especially new business (preferred), may not respect the rights and interests of shareholders.

The most important thing is that the above three problems may be long-term.

In response to these problems, Meituan has actually given countermeasures, as follows:

The first solution given is “flash sale” + layered operation of low-frequency takeaway users

The second solution is to promote Li Shubin (senior vice president), fight for live broadcasts and short videos, and imitate Duoduo Video

The third problem is that some adjustments have been made, but the direction has not been changed, and the scale has not been reduced.

Currently, the most complained about game in the market is Infinite Warfare, which hopes to cut off the preferred business.

The above three issues are basically the mainstream consensus of the market and constitute the current dilemma of Meituan. The management authorities have also given response strategies.

The above are all objective facts.

Strategy is actually about trade-offs and trade-offs, as well as the handling of main contradictions and priorities.

In my opinion, 1 and 3 are actually the same type of problems, both exploring and breaking the ceiling, and I also agree with the management strategy that we should not directly turn off the first choice. (If you don’t learn Byte, you will give up the game completely)

The preferred business is worth trying, but perhaps we should change the scale and strategy, try it on a small scale, and control the quarterly loss within 1 billion.

It is a pity thatFrom the perspective of public company dynamics, Meituan’s management may believe that the core conflict is the competition with Douyin。

In my personal opinion, I tend to give priority to solving the third problem and spend the most energy on it.

The main logic is that Douyin and even Kuaishou’s attack on local life does have an impact on cash cows, but it is not outrageous.

Take Meituan’s rural areas as an example when it surrounded cities, high-frequency and low-frequency, and “bullied” Ctrip. Today, Ctrip is still the leader in OTA. In fact, the situation of Meituan Liquor Travel is more optimistic. Even if S&M expenditures increase sharply, the net profit margin of this business is still as high as 33%.

In addition, the offensive side is too quick and does not have the initiative in its own hands, so it cannot resolve the war.

Instead, it’s more worthwhile to prioritize bleed and ceiling issues.

after allKilling profits is a small problem, but the logic of killing “Meituan’s evolution from a growth stock to a value stock” is even more terrifying.. At the same time, development itself can solve more problems.

Meituan wastes too much energy on Douyin.

Of course, Meituan has its own board of directors and strong corporate governance; at the same time, Boss Wang is not outrageous. Therefore, the big funds that have been trapped should wait for the correction mechanism.

Source of this article:Shunji Akimotooriginal title: “Meituan’s Current Dilemma and How to Break It”

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