Meituan's shares took a 5.25 percent dive in the Hong Kong market on Tuesday, after a 7.07 percent slide over the previous day, as investors grow jittery about the prospect of the Chinese food delivery giant, the next domestic tech giant after Alibaba to be hit with an antitrust probe.
Its shares have largely been on a downward spiral since the country's top market regulator announced on April 26 the launch of a probe into Meituan for suspected monopolistic practices including forced exclusivity arrangements, known as choosing one out of two.
Alibaba was previously slammed with a record $2.8 billion antirust fine after an investigation that started in December determined that the e-commerce giant had abused its market position for years.
Since then, Meituan seems to have been caught in a chain of troubles stirring concerns about its business practices and future prospects.
Shortly after the antitrust probe announcement, Meituan found itself in hot water after a video went viral showing a field investigation by an official from the Beijing municipal government who volunteered to work as a deliveryman for the company for a day. The probe exposed certain issues including low wages.
In a swift response, Meituan vowed to improve working conditions for its vast network of deliverymen.
Fueling investor anxiety, the Shanghai Consumer Council announced late Monday that it had met with Meituan and Pinduoduo, the upstart rival to Alibaba, urging them to rectify violations of consumer rights.
Further, a recent new guidance issued by the local government in Nanjing, East China's Jiangsu Province, requires businesses to cover basic social insurance for full-time food delivery riders.
If the new rule comes into force, Meituan is likely to see an increase of 10 percent in its unit rider cost in a worst-case scenario, according to estimates by Credit Suisse.
Food delivery riders are primarily under outsourced contracts without basic and medical insurance.
Additionally, there's speculation among western media outlets that the Tuesday selloff could have been precipitated by a controversial poem posted by Meituan's Chairman and CEO, Wang Xing, on the social media platform Fanfou last week. Wang deleted the post on Sunday and issued a clarification claiming the poem was aimed at his company's rivals, media reports said.
Meituan did not provide any comments.
Meituan's Hong Kong-listed shares had shed nearly 12 percent this week. By comparison, the Hang Seng TECH Index has lost 3.84 percent this week.