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Alibaba Group’s (BABA.BA) stock has taken a significant hit, plummeting by 6.7% over the past month. This dramatic decline is largely attributed to the intensifying food delivery price war in China.
As the competition between Alibaba and its rivals JD.com and Meituan heats up, investors are growing increasingly cautious about the e-commerce giant’s prospects. The recent slump has put a significant dent in investor confidence, causing concerns over the company’s ability to defend its market share.
According to reports, the price war has already burned through $4 billion in subsidies in just one quarter alone, with no signs of abating anytime soon. Analysts are now warning that this unsustainable business model could result in Alibaba losing up to $5.7 billion in its food delivery segment by mid-2026.
The shift in strategic focus from AI innovation to defending market share through costly subsidies has also raised eyebrows among analysts and investors alike. Many have expressed concern over the company’s decision to sacrifice long-term profitability for short-term gains, which could ultimately hinder its growth in innovative sectors.
Furthermore, regulatory warnings are emerging, with authorities hinting at the “disastrous impact” of the price war on market stability. The Chinese government has historically stepped in when competition becomes destructive. Analysts believe that if the market sustains heavy losses and profit margins continue to erode, intervention is a real possibility.
Source: coincentral.com
