Shares of Meituan plunged 9.8 percent on May 10 and fell another 5.3 percent to a 7-month low on May 11, evaporating nearly $300 billion in market value in two days, for reasons related to a Tang poem.
Chinese food delivery giant Meituan’s share price fell further on May 11, many reports pointed out that the reason was a Tang poem “Burning the Book Pit” quoted by founder Wang Xing on May 6 on his social media platform “Rice No”.
Once the posting came out, Meituan lost US$30 billion in market value in two days. The report said that in addition to his use of a Tang poem to satirize the past and present may have triggered a sell-off, investors still feel uneasy about the regulatory crackdown on Meituan last month. In addition, Chinese technology stocks have fallen widely in recent days, with the Hang Seng Technology Index, which includes Chinese tech giants Alibaba, Tencent and jing’don (JD.com), falling as much as 4.5 percent to a six-month low on Tuesday.
The work of Tang Dynasty poet Zhang Jie satirizes the burning of books and Confucius by Qin Shi Huang, who was finally overthrown by Liu Bang and Xiang Yu, who “do not read”. Wang Xing’s move was interpreted as a sign of dissatisfaction with a series of regulations by the authorities and criticism of Chinese Communist Party President Xi Jinping.
The original post was deleted by Wang Xing, who posted on the 9th, explaining that the original intent of the poem was to remind himself that the most dangerous opponents might not be expected, and citing Ali, Jingdong and Jindo as examples, saying that Meituan’s opponents might be new companies and new models.
Meituan declined to comment further at this time.
The next “Ant”?
The Shanghai Consumer Council said Monday (May 10) that it had summoned Meituan and Jindo, accusing them of violating consumer rights, which also raised concerns among investors. According to AFP, the Shanghai Consumer Council accused Meituan of problems with refunds and misleading content in its app.
For its part, Reuters quoted Wang Hua, chief investment officer at Hong Kong-based eFusion Capital, as saying, “I think mainland Chinese investors are more concerned about the poem, but international investors are more worried about the company’s rising cost of hiring delivery workers.” He was referring to social media criticism of how Meituan and its peers treat delivery workers, a labor force most of whom don’t receive basic social and health insurance.
Meituan.com, backed by Chinese tech giant Tencent, has seen its shares soar since its 2018 IPO in Hong Kong, placing it among China’s most valuable tech companies. But in late April, Meituan was among 13 Internet companies summoned by China’s financial regulator that were “asked to rectify” their alleged monopolistic practices. Meituan said it would cooperate with the submission plan.