Meituan Investments In AI And Robotics Yield USD 1 Billion Windfall Amid Core Business Loss
- tech360.tv
- 2 hours ago
- 2 min read
Chinese food-delivery giant Meituan is set to reap a sizeable financial windfall from its investments in frontier technology, including fast-rising artificial intelligence company Zhipu AI. The investment windfall provides a cushion as core-business margins face intense pressure from a battle with Alibaba Group Holding and JD.com.
Meituan posted an adjusted net loss of 4.97 billion yuan, or USD 735 million, for the three months ended March 31, marking its third consecutive losing quarter. At the same time, the company disclosed that its investments in firms like Zhipu generated a 7.6 billion yuan gain.
The windfall was recorded as fair value through other comprehensive income, meaning it was excluded from the operational profit-and-loss accounting of Meituan. Meituan held a 3.86% stake in Zhipu, which is known internationally as Z.ai.
Based on the market capitalisation of Zhipu of 629.5 billion yuan, the equity interest of Meituan translates to 24.3 billion yuan in financial gains. The shares of Meituan jumped more than 9% to HKD 85.50.
The cushion arrives at a critical time, as the core food delivery margins of Meituan remain under intense pressure amid a fierce three-way battle with Alibaba Group Holding and JD.com. Alibaba owns the South China Morning Post.
Meituan also owns a 7.61% stake in Unitree Robotics, an organisation famous for its dancing and backflipping humanoid robots. Unitree passed a public listing committee hearing, clearing a major regulatory hurdle towards an initial public offering on the tech-heavy Star Market in Shanghai.
Zhipu AI also announced that it was weighing an application to list on the Star Market. Senior equity analyst Chelsey Tam at Morningstar said the modest holding of Meituan in Zhipu suggested that its investments were less of a long-term strategy and more of an opportunistic windfall.
Tam added that unless Meituan evolves into a conglomerate like Berkshire Hathaway, its long-term investment appeal will continue to rest on its core business. Meituan is not the only tech giant reaping rewards from early bets on local AI disrupters.
Ant Group, which is the financial affiliate of Alibaba, holds a 3.61% stake in Zhipu, amounting to a 22.7 billion yuan gain. Since its debut on the Hong Kong stock exchange, the market capitalisation of Zhipu has eclipsed both Meituan and JD.com.
The shares of Zhipu closed at HKD 1,412, representing a more than tenfold increase from its initial public offering price of HKD 116. Meanwhile, shares in Shanghai-based rival MiniMax, which went public in Hong Kong just one day later, have surged more than fourfold, closing at HKD 667.50.
The share appreciation of the firms reflected market hype over Chinese AI start-ups and expectations for their future growth, analysts at securities firm SPDB International said in a research note. The analysts of the consultancy attributed the soaring valuations to the booming AI industry, the scarcity of investment bids, high growth prospects, technology breakthroughs in the AI field, and limited liquidity.
Meituan secured a 7.6 billion yuan investment gain from frontier technology firms like Zhipu AI.
The financial windfall cushions a quarterly adjusted net loss of USD 735 million caused by intense core food delivery competition.
Meituan holds a 3.86% stake in Zhipu AI and a 7.61% stake in Unitree Robotics.
Source: SCMP
