(Bloomberg) — Meituan’s stock plunged to a seven-month low after the Chinese e-commerce company’s billionaire chief executive officer shared and then deleted a poem on social media that some interpreted as a veiled criticism of Beijing.
The food delivery giant fell almost 10% in Hong Kong before closing 7.1% lower to wipe out about $16 billion. Wang Xing posted a classical poem about book burning by the emperor during the Qin dynasty on social media platform Fanfou.com, according to the Hong Kong Economic Times. He deleted it on Sunday and issued a clarification that he used the poem in reference to the company’s competitors. A Meituan spokesperson confirmed both posts and declined to comment further.
Investors are jittery after business figures who appeared to criticize the government have faced consequences. Wang’s rival Jack Ma angered Beijing in October last year by blasting regulators publicly over what he considered to be an antiquated approach to oversight. That speech was followed swiftly by tightened rules over consumer lending, the scuppering of Ant Group Co.’s record $35 billion initial public offering as well as an antitrust probe into Alibaba Group Holding Ltd.
“To a certain extent, one can interpret the poem posted by Wang Xing as similar to Jack Ma’s criticism of the banking regulators,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “This is not a good time to be too vocal!”
China’s technology sector has come under intense regulatory scrutiny in recent months amid concern the largest firms have grown too powerful. That’s weighed on the shares, with the Hang Seng Tech Index tumbling almost 30% from its February high. The antitrust watchdog has launched an investigation into suspected monopolistic practices by Meituan, including forced exclusivity arrangements.
The Shanghai Consumer Council criticized Meituan on Monday for practices that hurt consumers’ rights, including refund problems and misleading content on its mobile app. The company has vowed to submit a rectification report in the near term.
Meituan reported a net loss for the final quarter of 2020, which prompted the three global credit-rating agencies to downgrade their outlooks. The firm raised $10 billion selling shares and convertible bonds in Hong Kong last month, after burning through cash trying to expand its business.
The shares, which have more than 50 buy ratings and no sell recommendations, have fallen for a record nine days. They’re down 42% from their February high in one of the worst performances on the Hang Seng Index.
The poem Wang shared is by Tang dynasty poet Zhang Jie about the book burning that took place under emperor Qin Shi Huang.
“What the CEO posted is a very famous anti-establishment poem, which shows that he might be under a lot of pressure from the ongoing investigations,” said Hao Hong, head of research at Bocom International in Hong Kong.
The following is Wang’s clarification:
“A poem from the Tang dynasty inspired me a lot lately: the Qin dynasty was afraid of scholars but Liu Bang and Xiang Yu, whose uprising overthrew the Qin regime, didn’t have much education. This has reminded me that the most dangerous competitors are often not those expected. Alibaba has been focusing on JD.com these years, only to see Pinduoduo exceed it in user numbers. Similarly, Ele.me looks to be the biggest rival of Meituan’s delivery business, but what could really cause a shock to the industry may be some companies and business models that haven’t come under our radar.”
(Updates with Shanghai Consumers Council comment in sixth paragraph.)
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