By Bingyan Wang
Shares of Chinese food-delivery company Meituan were sharply lower in Hong Kong trading Wednesday following news that a rival Bytedance unit is considering expanding services in China.
Meituan's stock fell as much as 9.4% to 148.30 Hong Kong dollars (US$18.89) and was recently 6.4% lower, on track for its biggest one-day percentage drop in two months.
Several Chinese news outlets reported Tuesday that Bytedance's Douyin is weighing expanding its food-delivery services to more Chinese cities as early as March. A Douyin representative on Wednesday confirmed the news to Dow Jones Newswires without specifying a timeline.
Douyin, owned by TikTok parent ByteDance Ltd., currently operates in three cities including Beijing and Shanghai.
Meituan didn't immediately respond to a request for comment.
Daiwa Capital Markets analyst John Choi said that news of Douyin's possible expansion was likely behind Meituan's share-price slump. "The market seems to be concerned about more competition coming into the space," he said.
Citi analyst Alicia Yap said in a recent note that while concerns about rising competition will likely remain, "we believe a possible steeper-than-expected recovery trend thanks to solid demand rebound and strong execution could overshadow any competitive tension near term."
The investment bank has opened an upside 90-day catalyst watch, citing a potentially stronger-than-expected first quarter and the growth outlook for this year.
Write to Bingyan Wang at bingyan.wang@wsj.com