Moody's Cuts Meituan Outlook to Negative, Affirms Rating

Moody's Adjusts Meituan's Financial Outlook

Moody's Ratings has affirmed Meituan's Baa1 issuer rating but has revised the company's outlook from stable to negative. The change reflects growing uncertainty over the recovery of its core food delivery business amidst fierce market competition and ongoing margin pressure.

Performance Metrics and Market Pressures

Meituan's revenue growth slowed to 12% for the twelve months ending September 2025, a significant drop from over 20% in previous years. The company's adjusted EBITDA margin fell sharply to 2% from 13% in 2024, driven by increased spending on subsidies to counter competitors. This has led to segment losses in food delivery since the second quarter of 2025.

Investment and Leverage Projections

The negative outlook signals that Meituan's leverage may remain elevated longer than expected due to higher investment needs, such as the recent $717 million acquisition of Dingdong. Moody's projects Meituan's adjusted debt will rise above RMB60 billion, though its strong liquidity with RMB141 billion in cash provides a substantial buffer.

Future Outlook

While Moody's expects Meituan's profitability to gradually recover, with EBITDA margins projected to reach 5%-6% in the next 12-18 months, the negative outlook highlights significant near-term risks. Investors will be closely watching the company's ability to navigate the competitive landscape and manage investment costs effectively.

FAQ

Q: Why did Moody's change Meituan's outlook to negative?
A: The change was due to rising uncertainty in the recovery of its food delivery business, intense competition, and ongoing margin pressure.

Q: What is Meituan's current rating from Moody's?
A: Meituan's issuer and senior unsecured ratings remain affirmed at Baa1.

Source: Investing.com