Couch Commerce

Food Delivery Giant Meituan’s Sales Beat Estimates

(Bloomberg) -- Meituan Dianping’s shares soared after it reported a smaller than expected 13% slide in revenue that drove hopes the world’s largest meal delivery business is starting to recover as China emerges from Covid-19 lockdowns.Its shares climbed as much as 9.7%, extending strong gains since China began to return to normal in mid-March and propelling Meituan’s market value to more than $100 billion. That surge came after Meituan reported better-than-expected sales of 16.8 billion yuan ($2.4 billion) in the three months ended March. Morgan Stanley and CICC were among the brokerages that lifted their targets on Meituan, citing resilience across business lines and easing competition.Backed by Tencent Holdings Ltd., Meituan’s sprawling services from food delivery to in-store dining and hotel booking were among the most vulnerable to nationwide shutdowns. But its businesses had begun to climb out of the trough, offsetting severe slumps in areas such as hotels, executives told analysts on a Monday conference call. As of March’s final week, more than 70% of restaurants surveyed had recovered more than half their normal order volumes, while 30% had exceeded pre-pandemic levels, Chief Executive Officer Wang Xing said.“COVID-19 had a negative impact on Meituan but results beat on top-line and bottom line by a wide margin,” Bernstein analysts led by David Dai wrote. In food delivery, the “long run potential is still there and the profitability level can be much higher” after the company pushes advertising, they added.Longer term, the internet services giant will have to grapple with China’s worsening economy, which may further dent consumer spending. Subsidies and measures to help restaurants and merchants during the outbreak will again pressure profitability in the June quarter, executives said.Meituan reported a lower-than-projected net loss of 1.58 billion yuan, but that was after three successive quarters of profit.“Looking into the next three quarters, we believe there will still be challenges as there are still uncertainties and potential downside from the ongoing evolution of the COVID-19 situation,” Wang said on the call. “Meanwhile, a large number of local service merchants are still struggling for survival. Short-term profitability is not our top priority.”What Bloomberg Intelligence SaysMeituan’s near-term growth may weaken as its in-store dining, hotel and travel businesses take time to fully recover from China’s coronavirus outbreak. Operating efficiency will likely improve in the longer term as the company expands its market-leading scale and competition with Alibaba moderates. Broadening service categories and providing technology solutions for merchants will aid sales and profit growth.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Before the outbreak, Meituan had pushed aggressively into adjacent arenas from online travel to ride-hailing. While revenue from the business that encompasses hotels and travel plunged 31% plunge during the March quarter, Meituan’s much smaller new initiatives segment -- which includes bike- and car-hailing -- grew sales 4.9%, aided by the launch of a new grocery delivery service. Hotels remained hardest-hit: in the week of May 11, domestic room nights were at about 70% pre-pandemic levels.While Meituan is expanding offerings to sell things like handsets and farm produce, rivals including Ant Group and SF Express, both backed by Alibaba Group Holding Ltd., are elbowing their way into Meituan’s core takeout business. Alibaba’s food-delivery arm Ele.me is also engaging in a subsidy battle with the startup for market leadership.(Updates with target increases by brokerages in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Meituan Shows What Really Matters in a Pandemic

(Bloomberg Opinion) -- Meituan Dianping suffered from the Covid-19 pandemic in all the ways that investors would have expected: In-person activities got stung, food deliveries stayed relatively resilient and groceries thrived. As a result, revenue dropped and losses widened.What’s surprising is the area where China’s leading delivery and bookings provider benefited most: advertising. Even with business activity decimated, suppliers who rely on Meituan’s connection with customers kept spending money to chase the few orders that were available. Ad spending on food delivery climbed 21%, while that same subcategory in bookings only dropped 8%. This latter figure is remarkable because the number of hotel room nights plunged 46%. These strong results helped lift the stock almost 10% in early Tuesday trading.This comes as revenue in Meituan’s only profitable division — the one that handles restaurant and hotel bookings — dropped 31%, which cut earnings there by 57%. Food-delivery sales fell a mere 11%, with losses narrowing by more than half. On the upside, demand for grocery shopping and micro loans drove the company's new initiatives business 5% higher. Overall, operating loss widened 32% to 1.7 billion yuan ($238 million).I discussed Meituan’s advertising strategy six months ago, likening it to the virtuous cycle deployed by Amazon.com Inc. Having gathered both consumers and suppliers, Meituan can leverage that critical mass to extract income beyond simple commissions. To get ahead of the competition, restaurants not only need to be on the platform, but pay to be seen.In an investor call Monday night, management highlighted that big brands are jumping aboard. With stores closed and consumers afraid to go out, those that previously survived purely from in-store dining realized that delivery is critical. Customers, meanwhile, wanted food from the premium establishments because they’re perceived to be safer and more hygienic. It was a win-win.Except if you’re a little local eatery that’s made its business on stir-fry and two-dollar noodles. While millions of consumers will again one day appreciate the convenience and camaraderie of a quick, cheap meal at the neighborhood joint, volumes could drop sharply if people continue to embrace delivery. Now when they vie for ad space, smaller restaurateurs will be competing with a new wave of branded outlets that have larger marketing budgets.This will still be good for Meituan. The company’s earnings show that when the market is crowded and the pie is shrinking, advertising isn’t a luxury, it’s a necessity. What this portends for the future of small businesses amid an ongoing economic slowdown, however, is less encouraging.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Hong Kong Finance Has a Security Blanket

(Bloomberg Opinion) -- China’s decision to impose a national security law on Hong Kong has spurred speculation of capital flight and an erosion of the city’s status as an international financial center. As a venue for share offerings, at least, the near-term future is looking bright. For that, the territory can thank worsening U.S.-China relations.U.S.-listed Chinese technology companies are lining up to sell stock in Hong Kong, seeking refuge from an environment that has become increasingly less hospitable. Nasdaq-traded JD.com Inc. and NetEase Inc. are planning secondary listings in the city next month, following a trail blazed by Alibaba Group Holding Ltd. in November. Optimism that more companies will join them drove shares of Hong Kong’s exchange operator up more than 6% on Monday.There’s every reason to expect these stock offerings to do well, and push Hong Kong back up the rankings of the world’s largest fundraising centers. So far this year, the city is the sixth-largest market by capital raised. It topped the table for the whole of 2019 when New York-listed Alibaba sold $13 billion of stock, underscoring the existence of a strong local investor base for China’s most successful companies.The reception for Alibaba suggests that Asian institutional investors want to be able to trade China’s leading enterprises in their own time zone. JD and NetEase are also among the nation’s technology champions. Beijing-based JD competes with Alibaba in e-commerce, while Hangzhou-based NetEase is behind some of the most popular mobile games in China. Beyond these two, search-engine operator Baidu Inc. is considering delisting from Nasdaq and moving to an exchange nearer home, Reuters reported last week. The coronavirus has exacerbated tensions between Washington and Beijing, while scandals such as fabricated sales at Luckin Coffee Inc. have spurred politicians to push for tighter regulation, giving Chinese companies an incentive to list elsewhere.Hong Kong is an obvious choice. The city burnished its appeal for U.S.-traded companies last week when the compiler of the city’s benchmark Hang Seng Index said it would change its rules to admit secondary listings and companies with dual-class share structures. Stocks that join the benchmark can expect inflows from passive investors such as exchange-traded funds that track the index.Citigroup Inc. reckons that 23 of the 249 Chinese stocks traded in the U.S. meet Hong Kong’s criteria for a secondary listing, which require companies to have a market value of $5.2 billion or, alternatively, a combination of $129 million in annual sales and a $1.3 billion market cap. JD tops the group with a value of $73 billion.An even more alluring prize would be inclusion of secondary listings in Hong Kong’s stock-trading links with the Shanghai and Shenzhen exchanges, which would enable mainland Chinese investors to buy these shares. Alibaba wasn’t included in the stock connect, to the disappointment of some investors. China’s government could yet decide to make this happen.It’s a reminder that Beijing has levers at its disposal to help shore up Hong Kong’s economy and financial industry, which accounts for a fifth of the city’s gross domestic product — as it did after the SARS epidemic in 2003, when half a million people demonstrated against the Hong Kong government’s first, aborted attempt to introduce national security legislation. Hong Kong Exchanges & Clearing Ltd. surged the most in 18 months Monday even as unrest returned to the city. Listing of American depositary receipts may double the exchange operator’s revenue, Morgan Stanley said. The Hang Seng Index, meanwhile, stabilized after slumping 5.6% on Friday.An exodus of businesses, people and capital may yet imperil Hong Kong’s role as an international financial center. The IPO outlook suggests that, rather than a sudden demise, that’s likely to be a long drawn-out process.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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3 Stocks to Buy and Hold for Decades

The key characteristics of companies that can stand the test of time include a long runway for growth, a dominant market position, and a large and untapped addressable market. Amazon clocked up net sales of $75.5 billion during the previous quarter, up 26.6% year over year, while generating trailing twelve-month free cash flow of $24.3 billion. Amazon's dominance should allow it to continue to grow over the long term, as more countries industrialize and more consumers switch to e-commerce.

3 Ways JD.com Is Beating Amazon

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China asserts ‘strong dissatisfaction’ after U.S. expands tech blacklist for human rights abuses

China denounces a move by the U.S. Commerce Department to expand its so-called entity list of Chinese firms, which are restricted from doing business with U.S. firms, for alleged human rights abuses in the Xinjian Uighur Autonomous region.

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  China demands US withdraw sanctions on tech suppliers

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  Beijing vows to shield firms from US sanctions over Xinjiang

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‘It’s time for China to blink first,’ says Rep. Sherman, who leads the drive to delist China stocks

Sherman says that the time has long passed for Washington to force Chinese companies to provide the same investor protections that U.S. companies have for decades.

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Coronavirus: How Chinese rivals are trying to take Zoom's crown

The coronavirus lockdown has fuelled the market for teleconferencing technology apps.

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Alibaba Drops After Projecting Slowing Growth in Uncertain Times

(Bloomberg) -- Alibaba Group Holding Ltd. slid after projecting revenue growth will slow this year, reflecting post-Covid 19 economic uncertainty at home as well as the potential for U.S.-Chinese tensions to disrupt its business.Its stock slid as much as 4% in Hong Kong Monday, after a drop of almost 6% in New York before the weekend. The e-commerce giant forecast sales growth this year of at least 27.5% to more than 650 billion yuan ($91 billion), down from 35% previously and slightly below analysts’ estimates. While it posted a better-than-expected 22% rise in March quarter revenue of 114.3 billion yuan, that marked its slowest pace of expansion on record.Online shopping began to bounce back from March, executives said Friday. But the tepid outlook demonstrates the world’s second-largest economy has yet to fully shake off Covid-19, with consumers still hesitant about spending on big-ticket items. Asia’s most valuable corporation is tackling also the rise of rivals such as ByteDance Ltd. and Pinduoduo Inc. And the Tmall operator is going head-to-head with Tencent Holdings Ltd. for internet leadership in everything from online media to payments and cloud computing. JD.com Inc., the No. 2 Chinese online retailer, forecast better-than-expected revenue this quarter.“The market is a bit disappointed despite the strength given 2Q guidance of 20-30% YoY growth for JD and 99% GMV growth in 1Q20 for PDD,” CICC analyst Natalie Wu wrote. “We regard Alibaba’s advantage as a market leader as intact and unchanged in the longer run, though it may take several quarters for market sentiment to swing back.”Read more: Alibaba Sales Growth Plumbs New Lows While Uncertainty EscalatesAlibaba has lost more than $70 billion of market value since the coronavirus first erupted in January, and now has to grapple with not just an uncertain global economic environment but also any potential fallout from U.S.-Chinese financial tensions. On Friday, executives sought to assuage concerns about a U.S. bill that mandates much closer accounting scrutiny of U.S.-listed Chinese companies and may bar them from American bourses.Chief Financial Officer Maggie Wu said Friday Alibaba’s financial statements have been consistently prepared in accordance with U.S. GAAP accounting measures and were beyond reproach. “The integrity of Alibaba’s financial statements speak for itself, we have been an SEC filer since 2014 and hold ourselves to the highest standard,” she told analysts on a conference call. “We will endeavor to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”The bigger short-term challenge is in reviving growth: Alibaba’s bread-and-butter customer management or marketing business grew just 3% in the March quarter. Much of that stems from weaker consumer sentiment during the coronavirus-stricken quarter, when total Chinese e-commerce rose just 5.9% or at less than a third of 2019’s pace, according to government data. Jefferies analysts led by Thomas Chong wrote that Alibaba’s guidance was in fact a positive when viewed against an array of uncertainties gripping the post-Covid 19 global economic environment.What Bloomberg Intelligence SaysUser engagement and transaction volume have rebounded in April and May to precrisis levels, which bodes well for normalized sales growth ahead, especially as merchant-support measures are gradually rolled back.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Rival PDD posted a revenue rise of 44% on Friday, down sharply from 91% in the previous quarter but ahead of expectations. Its sales and marketing expenses jumped 49%. PDD’s shares climbed 15% Friday.Alibaba’s March-quarter net income was 3.2 billion yuan, down 88% from a year ago when it booked an 18.7 billion yuan one-time gain on investments. In February, Alibaba declared a waiver of some service fees for merchants struggling financially during the outbreak on its main direct-to-consumer Tmall platform. In April, the company rolled out a new 10-billion-yuan subsidy program for Tmall users to buy electronics, encroaching on JD.com’s traditional turf. These initiatives may further compress margins for the June quarter.“The challenging part is for them to achieve the same amount of growth this year,” said Steven Zhu, a Shanghai-based analyst with Pacific Epoch. “Just because they are too big, for the same amount of growth, they need to spend much more effort.”But executives were confident in a gradual e-commerce recovery over the year. Beyond its main business, younger divisions such as its cloud computing arm should buoy the bottom line. That division’s revenue jumped 58% in the quarter.“Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance,” Wu said in a statement. “Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

2 Dividend Stocks You Can Safely Hold for Decades

While it's not the end-all indicator of a company's staying power, a company that has consistently raised its dividend for decades is likely one that possesses a durable competitive advantage that allows it to grow its revenue and profits over time. Here are two stocks that have delivered a good balance of capital appreciation and rising dividend payments for more than 25 years. Walmart (NYSE: WMT) currently pays a dividend yield of 1.72%.

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Don't Miss Out on Amazon's Massive Healthcare Opportunity With the Coronavirus Pandemic

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Walmart vs Target: Who's the E-Commerce Winner During the Coronavirus Lockdown?

Back in late March, I outlined the reasons why I purchased shares of Walmart (NYSE: WMT) and Target (NYSE: TGT) as the economic lockdown to bring COVID-19 to heel got under way. Much has changed during the last two months, and migrating to e-commerce will continue to be a top priority for Walmart and Target as they play catch-up to Amazon (NASDAQ: AMZN). The first quarter (February to April 2020 for Walmart and Target) was a banner moment for both big box stores.

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• Coronavirus turns Walmart into an e-commerce dynamo

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The Stock Market Rally: Should I Buy Now or Wait for a Pullback?

Markets have bounced back sharply from their March lows. Here's what to do if you missed the bottom.

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There's an Unorthodox Stimulus Proposal Gathering Steam on Social Media

It wound up taking just weeks for the coronavirus pandemic to shut down nonessential businesses across most states, as well as put more than 36 million people out of work. Knowing full-well the implications of shutting down large swaths of the economy to slow disease transmission, Congress passed and the president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27. For example, the CARES Act provided $500 billion for distressed industry loans, close to $350 billion for small business loans, $100 billion for hospitals, and apportioned $260 billion to expand the unemployment benefits program through July.

Reliance launches JioMart online grocery service, challenging Amazon, Flipkart

Reliance Industries Ltd has launched an online grocery service, JioMart, the head of its grocery retail business said, in a move aimed at rivalling Amazon.com's local unit and Walmart Inc's Flipkart in the huge Indian market. JioMart will deliver groceries in more than 200 towns across the country, Damodar Mall, chief executive of grocery retail at the Indian conglomerate, said on Twitter late on Saturday. Mumbai-headquartered Reliance has not announced JioMart's launch at a time it is selling $7 billion in new shares.

Does This Valuation Of Amazon.com, Inc. (NASDAQ:AMZN) Imply Investors Are Overpaying?

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Amazon.com, Inc...

Gates Foundation Buys Up Amazon, Apple, Twitter Stock; Trims Berkshire Hathaway Stake

The Bill & Melinda Gates Foundation Trust has built up new positions in tech giants Amazon.com Inc. (AMZN), Apple Inc. (AAPL) and Twitter (TWTR) in the first quarter of the year, while trimming its investment in Warren Buffett’s Berkshire Hathaway.In the first three months of the year, the Gates Foundation Trust bought up 501,044 in Apple shares, according to a SEC filing. The iPhone maker’s stock, which dropped 15% in the first quarter, has since been on a recovery path, appreciating some 25% to trade at $318.89 as of Friday’s close. Given the recent rally, the $318.93 average price target by analysts indicates shares are fully priced (See Apple stock analysis on TipRanks).Microsoft founder Bill Gates and his wife established the world’s largest private foundation back in 2000. The foundation holds over $40 billion in assets.The trust also built up new positions in Twitter, which has soared 48% in the past two months, by purchasing 272,420 shares. In e-commerce giant Amazon it acquired 60,460 shares. It also bought 552,383 shares of Alibaba.For Amazon stay-at-home orders during the coronavirus pandemic have been good for business. Demand for its products has surged, with the internet colossus expanding operations during lockdown and responding to consumers’ needs, many of which switched to online retail for the first time during the global crisis.Although Amazon in March stopped accepting non-essential item shipments it already in April resumed those shipments with limits in place. Last week, the e-commerce giant decided to reschedule its annual shopping event Prime Day for September.“Improving shipping efficiency and its ability to execute on one of its primary value propositions/sources of competitive advantages gives Amazon confidence to reschedule its Prime day event for September,” five-star analyst Youssef Squali at SunTrust Robinson said in a note to investors.Shares in Amazon have surged 45% since mid-March and were trading at $2,436.88 as of Friday.The analyst counts Amazon among his favorite Buy-rated stocks in the current environment with a $2,700 price target, saying that despite concerns over the COVID-19 impact, the e-commerce company largely beat on both top and bottom lines.Turning now to Wall Street, analysts have a bullish outlook on Amazon stock. Out of the 41 analysts covering the shares in the last three months, 38 have Buys and the rest are split between 2 Holds and 1 Sell adding up to a Strong Buy consensus. The $2,673.17 average price target implies a modest 9.7% upside potential in the stock in the coming 12 months. (See Amazon stock analysis on TipRanks).The Gates Foundation Trust’s biggest new buy was the purchase of 6,981,665 shares of Schrodinger, a life and materials sciences software company. Meanwhile, the trust cut its holding in Berkshire Hathaway by 5,000,000 Class B shares, or 10.02%.Related News: Amazon Launches Food Delivery Services In India – Report Google, Apple Roll Out Coronavirus Contact Tracing Technology Facebook Workplace Hits 5 Million Paid Users As Remote Work Demand Rises More recent articles from Smarter Analyst: * Novavax Begins Human Testing For Covid-19 Vaccine, Expects Results In July * Molson Coors Suspends Dividend; Cuts Costs By $200M * Lufthansa Clinches $9.8 Billion Bailout Deal With German Government * Regeneron To Repurchase $5 Billion Stake From Sanofi

Is Expedia Group, Inc. (NASDAQ:EXPE) Trading At A 26% Discount?

Does the May share price for Expedia Group, Inc. (NASDAQ:EXPE) reflect what it's really worth? Today, we will estimate...