Analysis of Valuation Logic Restructuring for Local Life Services Amid Tightening Supervision of Food Delivery Platforms

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Since 2025, China’s food delivery platform industry has witnessed unprecedented intensive regulatory intervention. On May 13, 2025, the State Administration for Market Regulation (SAMR), together with the Central Commission for Social Work, the Cyberspace Administration of China, the Ministry of Human Resources and Social Security, and the Ministry of Commerce, held the first interview with platform enterprises including JD, Meituan, and Ele.me, focusing on prominent issues in competition within the food delivery industry [1]. This marked the first systematic intervention by regulators in food delivery platform competition, signaling a new phase in platform economy supervision.

Subsequently, on July 18, 2025, SAMR interviewed three platform enterprises (Ele.me, Meituan, and JD) again, with key words becoming “rationality, standardization, main responsibility, multi-party win-win, healthy and sustainable”. In response, on the morning of August 1, Meituan, Taobao, Ele.me, and JD successively released statements, promising to “standardize promotions” and proposing multiple measures to restrict subsidy behaviors [1].

On September 9, 2025, SAMR held its third-quarter regular press conference, stating that it would closely monitor competition in the food delivery industry and urge platforms to reasonably control subsidies to avoid disrupting the normal price system. In November 2025, the Ministry of Commerce issued the Guidelines for the Standardization of Instant Retail Industry, explicitly prohibiting malicious subsidy behaviors.

On January 9, 2026, regulatory intensity was further upgraded. The Office of the State Council Anti-Monopoly and Unfair Competition Committee launched an investigation and assessment into the market competition status of the food delivery platform service industry in accordance with the Anti-Monopoly Law of the People’s Republic of China [2]. This was the first time regulators commented on the food delivery war in 2026, and the fourth statement since the start of this round of food delivery war, escalating from verbal warnings to systematic investigation and assessment, with actions speaking louder than words.

Current regulatory policies can be summarized into four core dimensions:

. In the ten major system construction achievements of the comprehensive rectification of “involutionary” competition in 2025, SAMR clearly stated: “Involutionary competition is a type of low-price, low-quality, low-level competition that not only disrupts market signals, reduces the efficiency of market resource allocation, and erodes the long-term competitiveness of enterprises, but also affects the optimization and upgrading of industrial structure and high-quality development” [2]. Issues such as competing on subsidies, competing on prices, and controlling traffic are prominent, squeezing the real economy and intensifying “involutionary” competition in the industry.

. The issue of “digital land rent” of food delivery platforms is particularly prominent. High commissions continue to squeeze the profit space of catering merchants, leaving many merchants in a dilemma of “waiting to die if not entering the platform, and seeking death if entering” [3]. In terms of riders’ rights and interests, the five-insurance and housing fund guarantee system first implemented by JD has become the industry benchmark, and Meituan and Alibaba need to gradually optimize the rider salary structure and social security.

. Regulators are concerned that platforms may exclude competitors through predatory pricing, exclusive cooperation, algorithm restrictions, etc., leading to a rapid increase in market concentration and eventually forming an oligopoly pattern. Historical experience shows that the food delivery industry once experienced a stage of “burning cash to gain market share” due to platform subsidy wars, but this was followed by problems such as declining service quality, rising merchant commissions, and damage to riders’ rights and interests [2].

. The Central Economic Work Conference at the end of 2025 clearly identified three key priorities: “focusing on expanding domestic demand”, “accelerating the development of artificial intelligence”, and “preventing ‘involutionary’ malicious competition”. The underlying logic of regulation is to guide platform enterprises to invest resources in future-oriented technological capabilities such as AI, rather than indulging in the zero-sum game of “subsidy wars”.

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Before 2025, China’s food delivery market maintained a stable pattern with Meituan accounting for 70% and Alibaba’s Ele.me accounting for 20%. In February 2025, JD entered the market with “zero commission + 10 billion RMB subsidy”, completely breaking the market balance. The full-year campaign showed clear phased characteristics: the outbreak period from February to June, the intense period from July to October, and the gradual cooling period after November [4].

As of the end of 2025, the market pattern has changed significantly. Meituan still maintains its leading position with a market share of approximately 50%, with orders with a paid amount of over 30 RMB accounting for more than 70%, and the core user mindset has not been fundamentally shaken [4]. Alibaba’s Taobao Flash Sale has a market share of approximately 35%, with daily instant delivery orders equivalent to Meituan’s, both around 80 million. JD Food Delivery has a market share of approximately 15%, but has successfully opened a gap in the market.

Indicator	Meituan	Alibaba (Ele.me/Taobao Flash Sale)	JD
Daily Order Volume (millions)	80	80	15
Annual GMV (billion RMB)	1,200	800	180
Active Riders (millions)	7.36	4.0	1.2
Average Delivery Time (minutes)	34	38	42
Proportion of Delivery Service Revenue	34%	30%	25%
Rider Social Security Costs (billion RMB)	8.5	4.5	2.8

: Estimated based on public information and industry analysis [4][5]

: Current stock price is $100.80, with a market capitalization of $609.43 billion. The latest quarterly (Q3 2025) financial report shows revenue of $114.02 billion, exceeding market expectations by 9.22%, but EPS was -$2.84, falling short of expectations by 34.46%. The operating profit margin of the core local commerce segment plummeted from 21.0% in the same period of 2024 to -20.9%, with a quarterly adjusted net loss of RMB 16 billion, of which the core local commerce segment accounted for a loss of RMB 14.1 billion [6].

: Current stock price is $164.60, with a market capitalization of HK$3.05 trillion. The latest quarterly (Q2 FY2026) financial report shows revenue of $270.81 billion, falling short of market expectations by 8.55%, and EPS was $1.20, falling short of expectations by 37.50%. Although the local life business maintained growth, its profitability continued to be under pressure [7].

: Current stock price is $29.41, with a market capitalization of $417.3 billion. The latest quarterly (Q3 2025) financial report shows revenue of $42.0 billion, falling short of market expectations by 15.62%, but EPS was $0.52, exceeding expectations by 13.04%. The food delivery business is still in a stage of strategic loss [8].

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The traditional valuation logic takes GMV growth rate, market share, and user scale as core weights, with the implicit assumption of “scale expansion → market dominance → profit harvesting”. However, the fundamental changes in the regulatory environment are subverting this logic.

:

Dimension	Traditional Weight	Weight in Regulatory Environment	Change
Growth Expectations	30%	20%	-10%
Market Share	15%	10%	-5%
User Scale	10%	8%	-2%
GMV Growth Rate	15%	10%	-5%
Subsidy Efficiency	10%	5%	-5%
Network Effects	10%	8%	-2%
Marginal Cost	5%	10%	+5%
Regulatory Risk	5%	29%	+24%

The weight of regulatory risk has surged from 5% to 29%, becoming one of the most critical factors in the valuation model. This reflects investors’ systematic reassessment of policy uncertainty.

With the continuous strengthening of regulatory intensity, the pricing logic of investors on the equity risk premium of the platform economy is fundamentally changing.

:

Platform	Base Risk Premium	Incremental Regulatory Risk Premium	Adjusted Risk Premium
Meituan	6.5%	+3.5%	10.0%
Alibaba Local Life	6.5%	+2.5%	9.0%
JD Food Delivery	6.5%	+3.0%	9.5%

Meituan has the highest exposure to regulatory risks (local life business accounts for approximately 65% of its revenue), with a regulatory sensitivity of 95%, so it needs to bear the highest risk premium [6]. Although Alibaba’s local life business accounts for a relatively low proportion of the group’s revenue, as the initiator of this round of subsidy war, it faces greater anti-monopoly pressure. JD’s food delivery business is small in scale but is in a period of rapid expansion, with significant regulatory uncertainty.

is the most significant valuation pressure factor under the regulatory environment. According to industry estimates, if the rider social security policy is fully implemented, each platform will face an annual cost increase of approximately RMB 1.5-2.0 billion:

• Meituan: Approximately RMB 8.5 billion per year (7.36 million riders × incremental social security costs)
• Alibaba: Approximately RMB 4.5 billion per year
• JD: Approximately RMB 2.8 billion per year

. Meituan plans to invest RMB 20 billion to upgrade its AI dispatching system, aiming to reduce the average delivery time to less than 28 minutes, while expanding the commercial application scenarios of drones and unmanned delivery vehicles [4]. Alibaba’s Qianwen APP has connected to the entire ecosystem services, achieving cross-business collaboration through AI to reduce costs and increase efficiency [9].

:

Platform	Original Price-to-Sales Ratio	Regulatory Discount	Growth Adjustment	Profit Adjustment	Adjusted Price-to-Sales Ratio
Meituan	2.5	0.75	0.85	0.80	1.28
Alibaba Local Life	1.8	0.82	0.90	0.85	1.13
JD Food Delivery	1.2	0.78	0.88	0.82	0.68

The adjusted price-to-sales ratio has decreased by approximately 45%-50% compared with the original level, reflecting the market’s re-pricing of regulatory risks.

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As the industry leader, Meituan’s core local commerce business accounts for approximately 65% of its revenue, making it the platform most directly affected by regulation. DCF valuation shows [10]:

Scenario	Valuation	Premium/Discount vs Current Stock Price
Conservative Scenario	$399.53	+296.4%
Base Scenario	$586.39	+481.7%
Optimistic Scenario	$1,324.04	+1213.5%
Probability-Weighted Valuation	$769.99	+663.9%

However,

. Meituan’s current market price of $100.80 reflects relatively pessimistic market expectations. Investors need to focus on:

1. User retention ability after subsidy withdrawal
   : Meituan still holds approximately 70% of the market share for orders with a paid amount of over 30 RMB, and the stickiness of high-value users is the key support for its valuation [4]
2. Actual effect of technical cost reduction
   : The progress of AI dispatching system upgrade and commercialization of unmanned delivery will determine long-term profitability
3. Final implementation mode of rider social security costs
   : Whether it adopts JD’s model of “five-insurance and housing fund” or Meituan’s proposed occupational injury insurance will have a significant impact on valuation

Alibaba’s local life business (Ele.me + Taobao Flash Sale) faces a unique valuation restructuring logic. Alibaba holds approximately $40 billion in cash on its books, and with long-term financing, it can reach $60 billion [1], with strong financial strength to support long-term competition.

:

1. Ecological collaboration capability
   : Qianwen APP has been fully connected to Taobao, Taobao Flash Sale, Alipay, Fliggy, Amap and other businesses, realizing an AI-enabled service experience of “ordering food, booking flights, and shopping with one sentence” [9]. This ecological integration capability is a moat that Meituan and JD cannot replicate.

2. AI cost reduction potential
   : Alibaba’s AI adoption rate of 60% is the highest among the three platforms, with greater room for cost reduction through technologies such as AI dispatching and intelligent customer service.

3. Relatively controllable anti-monopoly pressure
   : Although Alibaba is the initiator of this round of subsidy war, the regulatory investigation is more directed at the industry competition order rather than a single enterprise.

The implied valuation of Alibaba’s local life business is approximately $45.8 billion (based on group market capitalization of HK$3.05 trillion × 15% proportion of local life revenue). After regulatory risk adjustment, the valuation range is $25.1-32.1 billion, representing a 30%-45% decrease from the implied valuation.

JD’s food delivery business is the smallest (with a market share of approximately 15%), but has the strongest determination for strategic investment. When it entered the market in February 2025, it launched “zero commission + 10 billion RMB subsidy” and promised to pay “five-insurance and housing fund” for full-time riders, adopting radical strategies on both the merchant and rider sides [5].

:

1. Differences in social security models
   : JD recognizes the labor relationship between full-time riders and the platform, while Meituan’s scheme avoids this issue. This difference makes JD leading in compliance, but it also faces greater cost pressure [5].

2. Disadvantages in cost structure
   : JD’s food delivery business has the highest subsidy dependence of 65% and rider cost structure proportion of 30% among the three platforms, so its valuation is under the greatest pressure in the regulatory environment.

3. Signals of strategic contraction
   : At the end of 2025, JD has basically “adopted a laid-back attitude” and was the slowest to respond to regulators, reflecting an adjustment of strategic focus [1].

The implied valuation of JD’s food delivery business is approximately $8.34 billion (based on group market capitalization of $417.3 billion × 20% proportion of food delivery revenue). After regulatory risk adjustment, the valuation range is $4.2-5.4 billion, representing a 35%-50% decrease from the implied valuation.

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Traditional valuation gives a 30% weight to GMV growth rate, which has decreased to 20% in the regulatory environment. Investors are paying increasing attention to:

• The time point for profitability recovery after subsidy withdrawal
• The specific path for the release of operating leverage
• The sustainability of free cash flow

Meituan’s management expects the core local commerce segment to achieve break-even by mid-2026 [4]. Whether this expectation can be fulfilled will be the key to valuation recovery.

Regulatory requirements such as rider social security, merchant commission caps, and data compliance are transforming from “external variables” to “endogenous costs”, which must be fully considered in the valuation model:

• Social security costs
  : An annual increase of approximately RMB 1.5-2.0 billion (industry total)
• Commission control
  : If a commission rate cap is implemented, the platform’s revenue will face a 10%-15% downward pressure
• Data compliance
  : The cost of compliance system construction and operation will increase by approximately 3%-5%

Network effects remain a core moat, but their weight has decreased from 10% to 8%. The importance of technological efficiency has increased:

• Accuracy and cost control of AI dispatching systems
• Commercialization progress of unmanned delivery
• Digital empowerment capability on the supply side

The core competitive advantage of Meituan Flash Sale lies in “its strong supply chain capability, which even surpasses its leading catering food delivery business” [4].

With the increasing weight of profitability, the valuation method is transitioning from Price-to-Sales (PS) to Price-to-Earnings (PE):

• Meituan’s current P/E (TTM) is -147.96 times, reflecting that its profit is still negative [6]
• The P/E of Alibaba’s local life business is approximately 22 times (based on the group as a whole)
• JD’s P/E is 9.96 times, with relatively conservative valuation [8]

The time point and quality of profitability recovery will become the key to valuation differentiation.

Under the regulatory environment, the industry growth rate expectation has been adjusted downward from 15% to 8%-10% (a decrease of approximately 40%). This adjustment reflects:

• Rising customer acquisition costs due to subsidy restrictions
• Pressure on monetization rates due to commission control
• Capital expenditure shifting from expansion to compliance and technical cost reduction

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. When evaluating local life businesses, investors must incorporate regulatory scenarios into the DCF model, set three scenarios (conservative, base, optimistic), and conduct probability weighting.

. Under the pressure of rigid compliance costs, technological means such as AI dispatching and unmanned delivery will become key variables for valuation differentiation. Alibaba (60% AI adoption rate) and Meituan (45% AI adoption rate) have relative advantages.

. Alibaba has connected its entire ecosystem services through Qianwen APP, realizing a closed loop from demand generation to value delivery [9]. This ecological collaboration capability has unique valuation resilience in the regulatory environment.

. Meituan maintains 70% of the market share for orders with a paid amount of over 30 RMB. High-value users are relatively insensitive to prices, which is the key support for its valuation [4].

: Regulatory intensity may exceed expectations. In particular, the introduction of policies such as commission rate caps and full coverage of social security will significantly increase cost pressure.

: If Alibaba or JD continue to increase subsidy investment, it may extend the industry loss cycle and delay the realization of profit expectations.

: The progress of consumption recovery may affect the growth of food delivery demand. A downward macroeconomic trend will superimpose industry regulatory pressure.

: The technological progress of AI dispatching and unmanned delivery may fall short of expectations, affecting the achievement of cost reduction and efficiency improvement goals.

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Tightening supervision over food delivery platforms is fundamentally restructuring the valuation logic of local life services. The three core trends of the valuation paradigm shift are: from “scale expansion-driven” to “efficiency optimization-driven”, from “GMV growth rate” to “profitability”, and from “network effects” to “technological efficiency”.

, as the industry leader, faces the highest regulatory exposure and the greatest valuation adjustment pressure, but its advantages in high-value user stickiness and technical cost reduction capability provide certain valuation support. has shown strong valuation resilience in the regulatory environment relying on ecological collaboration and AI capabilities. , although the smallest in scale, may face the largest valuation adjustment range due to its radical compliance strategy and limited market share.

From a long-term perspective, tightening supervision is actually an inevitable path for the industry to transition from “barbaric growth” to “high-quality development”. Enterprises that can achieve technical cost reduction, maintain profitability, and maintain ecological health under the pressure of compliance costs will stand out in the new competitive pattern and gain valuation premiums.

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[1] Zhihu Column - “Can the First Shot of Anti-Involution in Food Delivery at the Start of the Year Halt Malicious Competition?” (https://zhuanlan.zhihu.com/p/1993419597035086244)

[2] Sina Finance - “2026 Regulatory Blade Unsheathed! Is the End Near for Food Delivery Platforms’ ‘Burning Cash to Grab Stock Market’?” (https://finance.sina.com.cn/stock/t/2026-01-10/doc-inhfvxak0116173.shtml)

[3] OFweek - “From the Investigation of Ctrip, Understand the ‘New Landlord’ Dilemma and Anti-Monopoly Changes in China’s Internet” (https://mp.ofweek.com/Internet/a956714830627)

[4] 36Kr - “Alibaba Proactively Ramps Up Food Delivery War, Who Will Have the Last Laugh?” (https://m.36kr.com/p/3630661187159305)

[5] Ren Jingwei - “2025 Labor Rights and Interests Event Inventory” (https://www.renjingw.com.cn/newsinfo/10915201.html)

[6] Jinling API - Meituan (3690.HK) Company Profile (get_company_overview