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(Bloomberg) — An intensifying rivalry between JD.com Inc. (9618.HK, JDCMF) and Meituan in China’s food delivery space is dealing a blow to their share prices, as investors worry about the hit to profitability.

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JD.com (9618.HK) shares fell as much as 8.1% in Hong Kong on Tuesday, while Meituan (3690.HK) slumped 8% to its lowest in about seven months. Both stocks were among the worst performers on the Hang Seng Tech Index and the Hang Seng China Enterprises Index (^HSCE).

Since entering China’s delivery scene earlier this year, e-commerce retailer JD.com has been increasing investment and efforts to take on incumbent leader Meituan. Its foray has raised competition in the market, with players releasing discounts to entice price-conscious Chinese consumers and incentives for delivery staff. JD.com’s challenge comes at a critical time for Meituan, which has an aggressive expansion plan into overseas markets.

“It will not be easy for JD.com to gain a significant foothold in the market even if it provides large subsidies in the near term,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Industry dynamics work in the market leader’s favor. Low order values and thin margins make it difficult for sub-scale players to turn profitable.”

JD.com plans to add 100,000 full-time riders within the next three months and will also seek to arrange jobs for their partners, the company announced on Monday. It also accused an unnamed rival of pressuring couriers to not accept orders from other platforms. Meituan said in a WeChat post on the same day that it has not restricted couriers and added it welcomes other players.

Both platforms pledged in February to enroll all full-time food deliverymen in China’s social security system, marking a significant step up in costs. JD.com earlier in the month promised a year of zero commission for restaurants who sign up for its delivery program by the end of April.

The rivalry between JD.com and Meituan’s online delivery could restrict profit upside for 2025 earnings at both firms, Bloomberg Intelligence analysts wrote in a April 17 note.

Both stocks have fallen more than 25% from their highs in March, underperforming the Hang Seng Tech index.

JD.com faces a daunting task taking on Meituan — the distant leader in Chinese food delivery with a two-thirds market share — and other players including Alibaba Group Holding Ltd.’s (BABA, 9988.HK) Ele.me. TikTok parent ByteDance Ltd. scaled back its food delivery ambitions with Douyin after attempting to go head-to-head with Meituan in 2023.