Meituan shares slump as fallout from CEO's poem post festers

FILE PHOTO: Signs of Meituan are seen at its booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing, China, Sept. 4, 2020. REUTERS/Tingshu Wang/File Photo

SHANGHAI (Reuters) - Shares of Chinese food delivery giant Meituan slumped further on Tuesday in a sell-off precipated by the social media posting by its chairman of an ancient poem that was perceived by some as criticising the government and President Xi Jinping.

The company, which recently raised $10 billion, has lost $30 billion in market value over two days amid a broader drop in Chinese tech shares as investors remain jittery over a regulatory clampdown that last month ensnared Meituan.

The poem, posted on May 6 by Chairman and CEO Wang Xing on a small social media site that he founded, criticises the emperor of the Qin dynasty, who burnt books to suppress intellectual dissidents, only for it to be overthrown by illiterates. While many on Chinese social media interpreted the posting as an allusion to the anti-monopoly campaign backed by Xi, Wang on Sunday said he was referring to business rivals, saying that "the most dangerous opponents are often unexpected ones".

The original posting has been removed.

Meituan declined further comment.

Adding to investor concerns, the Shanghai Consumer Council said late on Monday that it had summoned Meituan and e-commerce firm Pinduoduo, accusing them of violating consumer rights. On Tuesday, Meituan shares tumbled 5.3% to a seven-month low. "I think mainland investors paid more attention to the poem, but international investors are more worried about the rising cost of employing riders of the company," said Fred Wong, chief investment officer at Hong Kong-based eFusion Capital.

He was referring to social media criticism of Meituan and other industry players' treatment of delivery riders, most of whom are not covered by basic social and medical insurance.

The Hang Seng Tech Index, which includes Chinese tech giants Alibaba, Tencent and, dropped as much as 4.5% on Tuesday to a six-month low.

(Reporting by Shanghai and Beijing newsrooms, Editing by Tony Munroe and Gabriela Baczynska)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3


Next In Tech News

Nvidia to invest at least $100 million in U.K. supercomputer, CEO says
Republican congressional committee will start accepting cryptocurrency donations
Demands of copyright trolls must be reasonable, EU's top court rules
U.S. FCC votes to advance proposed ban on Huawei, ZTE equipment approvals
Facebook launches ads globally for Instagram Reels
Daimler speeds up shift to electric vehicles, Manager Magazin reports
Google's cloud taps AMD for new service as chip wars heat up
Siemens to raise growth and profitability targets - report
Technology helps disabled student play the harp with her eyes
JPMorgan buys investment platform Nutmeg in UK retail push

Stories You'll Enjoy