Alibaba Group Holding (BABA) has lost over $100 billion in market value as its intensifying battle in China\u2019s food-delivery market continues to erode investor confidence and profitability. Its Hong Kong-listed shares have dropped 27% since March, significantly underperforming Chinese tech peers, including Meituan and JD.com, who are also caught in this price war.<\/p>\n\n\n\n
Analysts from Goldman Sachs and HSBC have lowered their price targets for Alibaba, citing escalating losses from the delivery business. Goldman now estimates Alibaba could sustain a loss of 41 billion yuan ($5.7 billion) through next June\u2014roughly a third of its net income for the fiscal year ended March.<\/p>\n\n\n\n
The food-delivery fight, intensified by JD.com\u2019s formal market entry earlier this year, has shifted attention away from Alibaba\u2019s AI ambitions\u2014particularly those tied to DeepSeek\u2014which had driven an 80% rally earlier in the year. Alibaba has since merged its food-delivery unit with its core business and aggressively increased subsidies to stay competitive.<\/p>\n\n\n\n
Nomura estimates that Alibaba, Meituan, and JD.com collectively spent $4 billion on discounts in the June quarter alone. Meituan recently declared it was going into \u201cattack\u201d mode against Alibaba, while JD.com rolled out new customer incentives. The ongoing \u201ccoupon war\u201d has drawn government criticism, with warnings about its toll on driver welfare and food safety.<\/p>\n\n\n\n
Despite earnings headwinds, analysts remain largely bullish: 44 \u201cbuy\u201d ratings and no \u201chold\u201d or \u201csell\u201d calls persist on Alibaba\u2019s Hong Kong stock, which remains historically undervalued at under 11 times forward earnings. Still, concerns remain.<\/p>\n\n\n\n
\u201cIf this continues, we could see deeper cuts to earnings and less capital flowing into AI,\u201d said Nicholas Chui of Franklin Templeton. \u201cUntil then, we\u2019re cautious.\u201d<\/p>\n\n\n\n
The market may need clear signs of discipline\u2014or regulatory intervention\u2014before investor sentiment improves.<\/p>\n\n\n\n