An Analysis on Business Risk of Jingdong and Meituan

Abstract

The development of the Internet has brought huge market development and expansion opportunities for e-commerce companies, especially the largest e-commerce platform companies in the market today. Therefore, many investors attach great importance to the investment of these firms. This article mainly uses the CAPM model together with other valuation equations to provide valuation data, and then combines realistic factors to evaluate the e-commerce platforms, represented by two B2C self-operated platform e-commerce companies with different service contents, JD and Meituan. Results shows that compared to Jingdong, Meituan has a lower business risk. We will try to elaborate the difference in business risk in terms of these three causes related to target customers: products and services, internal company decisions and the impact of real factors, i.e. COVID-19. Through the research on the two e-commerce companies’ risk, this article provides implications for investors to have a lucid investment understanding of distinct types of e-commerce platform companies, to make their investment alternatives scientifically.