Alibaba or Meituan? Morgan Stanley and JPMorgan Signal the Winner in Local Services

TradingKey - Alibaba recently re-entered the offline store business with its “Street Stars”, surpassing Dianping’s daily user scale on its first day — catching Meituan off guard in its core domain. International investment banks Morgan Stanley and JPMorgan have both concluded that Alibaba’s latest move may once again leave Meituan at a disadvantage.

Morgan Stanley: Alibaba’s Strategic Push Reshapes the Landscape

In a recent report, Morgan Stanley noted that the new “Street Stars” launched this week by Alibaba’s Amap has an operational model highly similar to Meituan’s Dianping, signaling a clear resurgence of Alibaba’s ambitions in the in-store services segment — one that could reshape the competitive dynamics of China’s local life sector.

Amap announced that the “Street Stars” attracted over 40 million users on its first day, exceeding Dianping’s August average of 32.6 million daily active users (DAU). This means Amap’s new product instantly became the largest food recommendation list in China by user scale.

According to Quest Mobile, Gaode currently boasts nearly 200 million DAU, making it China’s largest navigation app. Morgan Stanley said this massive user base provides Alibaba with a natural traffic gateway into the in-store services market.

From food delivery and instant retail to higher-margin on-site services, Alibaba’s footprint in local commerce is becoming increasingly comprehensive. Morgan Stanley expects that beyond the “Street Stars,” Alibaba will roll out more related products and services in the coming months.

Morgan Stanley believes this strategic push will directly challenge Meituan’s core business. Given expectations of rising near-term profitability pressure and intensifying competition eroding margins, Morgan Stanley has downgraded its long-term profitability forecast for Meituan’s in-store services from 2.5% to 2.0%.

Additionally, due to strong growth in AI and Alibaba Cloud, Morgan Stanley now views Alibaba as the top pick among Chinese e-commerce stocks, followed by Pinduoduo, Meituan, and JD.com.

On September 11, Alibaba’s Hong Kong shares (9988.HK) rebounded from an early drop of over 2%, closing up 0.35%, while Meituan (3690.HK) fell steadily, closing down 5.06% — underperforming the Hang Seng Index, which declined 0.43% that day.

JPMorgan: Low Barriers, High Synergy

JPMorgan also issued a report around the same time, expressing optimism about Alibaba’s renewed push into local services. The bank noted that the entry barrier into in-store services is relatively low for Alibaba, citing:

• Over 100 million DAU on Amap
• Existing broad merchant coverage
• Ability to quickly expand service reach through third-party providers

As such, JPMorgan believes the market should closely monitor quarterly changes in Meituan’s core local commerce profit margin as a key indicator of Alibaba’s competitive impact.

JPMorgan highlighted that Alibaba’s advantage lies in its ability to use Amap as a traffic funnel, and create strong synergies with Ele.me and Alipay — enhancing user stickiness and monetization potential across its ecosystem.