Alibaba’s BABA.BA Stock Plunges 6.7% Amid China’s Brutal Food Delivery Price War

Alibaba Group takes a hit as competition turns vicious in China's food delivery sector.

The numbers don't lie—BABA.BA dropped nearly 7% in just 30 days. Investors are sweating as rivals undercut margins in a race to the bottom.

Price wars: great for consumers, terrible for shareholders. Meanwhile, Wall Street analysts still call it a 'buy'—because of course they do.

TLDRs;

• Alibaba stock has dropped 6.7% in a month as it ramps up food delivery subsidies to counter rising competition.
• The ongoing price war with JD.com and Meituan has already burned through $4 billion in discounts in just one quarter.
• Analysts project Alibaba could lose up to $5.7 billion in its food delivery business by mid-2026.
• Investor confidence is waning as Alibaba shifts focus from AI innovation to defending market share in delivery services.

Alibaba’s stock has slipped 6.7% over the past month, with shares trading around $229.76 as of July 10, highlighting mounting investor concerns amid an intensifying food delivery price war in China.

The broader decline comes as the e-commerce and tech giant finds itself locked in an aggressive subsidy battle with rivals JD.com and Meituan, a competition that analysts warn could drag on longer than previous cycles.

Drop Reflects Mounting Investor Worries

Over the past five trading days, Alibaba’s stock has struggled to regain momentum, hovering just below $230 after closing at $231.84 the previous week.

The chart shows a downward drift, punctuated by volatility around July 9 and 10, reflecting investor jitters. While the broader Chinese tech market has been under pressure, Alibaba’s performance has lagged further due to its direct exposure to the discount-fueled food delivery war.

Nomura estimates that about $4 billion was burned in subsidies in just the June quarter alone by Alibaba, JD.com, and Meituan. As Alibaba integrated its delivery arm more tightly into its Core operations to fend off JD.com’s entry, it has also ramped up subsidies to retain customers. Analysts project this will cost the firm substantially over the next year.

Losses Mount as Price War Escalates

Goldman Sachs estimates Alibaba’s food delivery business could post a 41 billion yuan loss (around $5.7 billion) by mid-2026. That figure WOULD eat up nearly one-third of its recent annual net income, raising alarms about the sustainability of its broader business model.

The price war is particularly damaging because it’s not new , such aggressive tactics have defined the industry for years. However, this round is different because the companies involved are better funded and more willing to sustain losses.

Despite Alibaba’s relatively low price-to-earnings ratio of under 11, investors are staying cautious. HSBC has already cut its price target on the stock by 15%, reflecting a sentiment shift among institutional investors. They are increasingly weighing the long-term consequences of sacrificing margins to retain market share in a deeply contested space.

Strategic Focus Pulled from AI to Delivery Subsidies

The delivery wars have also complicated Alibaba’s efforts to position itself as a leader in artificial intelligence. Earlier this year, Alibaba was riding high on investor enthusiasm following its involvement in China’s AI boom, particularly around projects like DeepSeek. Its stock had surged more than 80% in two months. But with capital now being reallocated to short-term delivery market retention, its AI momentum appears at risk.

This strategic shift hasn’t gone unnoticed. Analysts like Nicholas Chui have expressed concern over companies that prioritize short-term market share gains over long-term profitability. Such decisions could delay Alibaba’s growth in innovation sectors, weakening its competitive edge against smaller, nimbler AI-focused startups.

Regulatory Warning Signs on the Horizon

There’s also the possibility of regulatory intervention. The Chinese government has historically stepped in when competition crosses into destructive territory. Warnings have already emerged, with officials hinting at the “disastrous impact” of the price war on market stability. Past tech crackdowns have wiped trillions off the market, and while current sentiment is more tech-friendly, analysts believe regulation remains a wildcard.

UOB Kay Hian’s Julia Pan believes that if the market sustains heavy losses and profit margins continue to erode, authorities may act to curb the price war. For Alibaba, that could either provide much-needed relief or force yet another strategic pivot.