Did Meituan stock crash on fake news?

The Meituan stock price (HKG: 3690) crashed over 10% during afternoon trade in Hong Kong following a report stating that Tencent Holdings (HKG: 0700), the company’s biggest shareholder, is set to divest.

The report by Reuters cited four anonymous sources who claim Tencent has been “engaging with financial advisers in recent months to work out how to execute a potentially large sale of its Meituan stake”.

The report claimed the sources believe the sale is being undertaken in order to appease Chinese regulators.

“The regulators are apparently not happy that tech giants like Tencent have invested in and even become a big backer of various tech firms that run businesses closely related to people’s livelihoods in the country,”

Tencent has not responded.

However, just hours later, and after the close of trading in Hong Kong, respected Chinese language technology industry publication 36 Krypton, claimed to have debunked the report.

“36 Krypton learned that some media reported that Tencent Holdings plans to sell all or most of its shares in Meituan. In this regard, 36 Krypton learned from sources close to Tencent that the above rumors are not true, and Tencent currently has no plans to sell shares of Meituan.” (translated).

Meituan is often referred to as the ‘UBER Eats of China’, operating the country’s most expansive food delivery platform.

Fellow Chinese tech giant, Tencent, owns 17% of the company – the stake currently worth around US$24 billion.

Meituan and Tencent have both been caught up in a brutal Chinese tech stock rout that has now lasted for over a year. Hong Kong-listed Chinese tech stocks and U.S.-listed Chinese tech ADRs have been hit the hardest.

Today things got even worse for Meituan shareholders, but only time will tell if the plunge is justified or if panicked investors have been fooled.