From 'Bleeding' to 'Listing': How Did Wang Xing's Meituan Go Public on the Hong Kong Stock Exchange Amidst Massive Losses?

Prologue: A "Shocking" Prospectus

September 20, 2018, Hong Kong Stock Exchange.

Wang Xing, dressed in a sharp suit, stood at the podium, his face still bearing his signature, slightly shy smile. On the giant screen beside him were the four characters for "Meituan-Dianping" and the constantly flickering stock code: 3690.HK.

This day was the closest he had come to "success" in the conventional sense in his 15 years of entrepreneurship.

From Xiaonei, to Fanfou, and finally to Meituan, this "warrior" who had repeatedly fought and lost had finally brought the company he founded with his own hands to the world's top capital market.

However, behind this grand "celebration," a lingering "shadow" was hidden.

With the release of Meituan's prospectus, a "shocking" set of data was presented to all investors: in the three and a half years before its listing, Meituan had accumulated losses of over 10 billion RMB.

A company losing billions each year was seeking a valuation of tens of billions of dollars. This caused a huge controversy in the capital market at the time.

Wall Street analysts repeatedly raised questions: Where were Meituan's "boundaries"? When would this model of "burning money" for growth ever end?

How would Wang Xing answer these sharp questions from the world's top "financiers"?

Act I: The "Amazon" Story

During the pre-IPO roadshow, facing the many doubts of investors, Wang Xing repeatedly told the same story—the story of Amazon.

He told investors that today's "Meituan" was very much like "Amazon" in the early 21st century.

At that time, Amazon was also a company that was perennially "loss-making." Its founder, Jeff Bezos, unhesitatingly invested every penny the company earned into new businesses (like AWS cloud computing) and larger infrastructure (like logistics warehouses).

At that time, Wall Street also couldn't understand Bezos. They criticized Amazon for "only knowing how to spend money, not make money," calling it "a retail company disguised as a tech company."

However, it was this extreme investment in "long-term value" that ultimately allowed Amazon to build a "moat" that no competitor could overcome, and grow into the trillion-dollar "super empire" it is today.

"People always overestimate the change that will occur in two or three years and underestimate the change that will occur in ten or twenty," Wang Xing quoted Amazon's famous saying.

The core logic he wanted to convey to the capital market was: please do not measure Meituan's value by its "short-term profits." Meituan's "losses" in new businesses like ride-hailing and bike-sharing today are, in essence, an "investment." It is building a grander, more diverse, and more stable "ecosystem" for Meituan's "tomorrow."

Act II: The Urgency of a "Blood Transfusion"

Of course, besides telling the story of the "future," Wang Xing's decision to go public while "bleeding" at that point also had extremely "realistic" considerations.

That is, Meituan was really, very "short on cash."

The multi-front war with giants like Didi, Ele.me, and Ctrip had kept Meituan's cash flow in a "tight" state.

Especially after the acquisition of Mobike, this "bottomless pit" that was "burning money" every day put Meituan's financial situation in an even worse position.

Wang Xing was keenly aware that the upcoming wars would be longer and more attritional "trench warfare." Meituan had to stock up on enough "supplies" before "winter" arrived.

And going public was the fastest and most effective way to obtain these "supplies."

The Hong Kong Stock Exchange in 2018 also happened to provide Wang Xing with a "heaven-sent" opportunity. It had just completed its most important listing system reform in 25 years, allowing "dual-class share structures" and "unprofitable" tech companies to list in Hong Kong.

Wang Xing shrewdly seized this fleeting opportunity.

He was willing to "rush" to complete the listing in this window, even under the pressure of "losses" and market skepticism.

His decision proved to be incredibly "prescient." Because just a few months later, the global capital markets began to take a sharp downturn, entering a long "winter."

Epilogue: A Ticket to the "Infinite War"

The IPO brought Meituan $4.2 billion in "ammunition" and gave this company, which had been struggling on the "death line" for 8 years, a real sense of "security" for the first time.

More importantly, it won Wang Xing a "ticket" to participate in the next, grander war.

In his speech on the day of the IPO, Wang Xing thanked Steve Jobs, and his famous quote, "Stay hungry, Stay foolish."

For Wang Xing, Meituan's IPO was not the "end" of his entrepreneurial dream; on the contrary, it was a brand new "beginning."

He was still "hungry," full of desire to explore all unknown fields; he was also still "foolish," willing to build the long-term value of the enterprise in the "heaviest" and "hardest" way.

The bell rang, and the stock price began to flicker. Wang Xing turned, walked off the stage, and disappeared into the crowd.

He was heading to another, longer, and lonelier, "infinite war."