Chinese regulators ordered food delivery firms such as Meituan to provide workers with insurance and pay them the local minimum wage. Shares in Meituan, China's largest food delivery platform, fell by 14% following the announcement.
- Meituan was valued at $52.8B following its 2018 IPO and peaked at a $100B valuation in May 2020.
- Tencent owns 17% of Meituan's stock.
- The announcement will also impact China's other major food delivery platform, Ele.me, which was acquired by Alibaba Group in 2018 for $9.5B.
- Alibaba’s share price dropped nearly 7% on Monday.
- Combined, the two companies employed over 5.7 million delivery workers in 2018.
In related news:
- As the Chinese government cracks down on tech companies, venture capitalists such as former Cisco CEO John Chambers are advising startups to avoid the market due to the instability.
- Indian food delivery startup Zomato's shares rose by 82% during its first day of trading in India on Friday, valuing it at $12.2B.