While much of the world is focused on a volatile international trade war, two of China’s largest internet companies are inflicting greater damage on each other at home.

JD.com Inc. has launched a costly battle to steal market share away from food-delivery leader Meituan, while the latter has been encroaching on the former’s e-commerce stronghold. The companies’ Hong Kong-listed stocks have dropped about 30% each from March highs, shedding around $70 billion in combined market value.

Investors are bracing for a prolonged struggle that will hurt earnings for the pair. Analysts have cut price targets for both stocks, and defensive positioning has ramped up in the options market.

“Both sides are worse off in the near term, and it’s unclear how long this battle will last,” said Daisy Li, a fund manager at EFG Asset Management HK Ltd. The intense level of competition in the Chinese food-delivery market will damage profitability, she added.

Even as Donald Trump’s tariffs have taken steam out of the recent China tech rally, the impact of this domestic rivalry stands out. Meituan and JD.com rank among the worst eight performers on the Hang Seng Tech Index this year after both were in the top half in 2024.

The switch came as JD.com deployed a cash-burning strategy to promote its JD Takeaway food platform, which was officially launched in February. The Beijing-based company has announced over $1.4 billion in discounts for consumers, waved commission fees for some merchants and aims to hire 100,000 full-time delivery riders.

JPMorgan Chase & Co. estimates JD.com has taken about 5% share of China’s food delivery market, which was previously divided at about 75% for Meituan and 25% for Alibaba Group Holding Ltd.’s Ele.me. The brokerage estimates that at the current scale, JD Takeaway could generate up to 18 billion yuan ($2.5 billion) in annualized losses, wiping out 36% of its parent’s operating profit for 2025.

“We don’t think this is a sustainable strategy because of the financial impact on group P&L,” analyst Alex Yao wrote in a note Tuesday. “It is cost prohibitive for a new entrant to gain significant market share in China’s food delivery market through a deeply subsidized growth strategy.”

Meituan has successfully fended off food-delivery competition in the past, but JD.com is seen as a formidable challenger given its existing delivery network. At the same time, Meituan made inroads this year into JD.com’s core quick-commerce field, computer and electronics products.

While both firms are heavily reliant on Chinese consumption, Meituan has been spending aggressively on expansion into overseas food delivery through its Keeta app.

“JD doesn’t have many growth opportunities left in China, and has very little overseas exposure,” said Felix Wang, head of global technology & software at Hedgeye Risk Management. In this context, its costly JD Takeaway foray is more of a defensive move and “not entirely about food delivery.”

Sell-side analysts have turned more cautious as the skirmish drags on. Though both stocks are overwhelmingly buy rated, the average price target for Meituan is down 8% from a March high, and JD.com’s has dipped about 4%.

The costs of hedging against declines in both stocks remain far above their one-year averages. For JD.com, the ratio of outstanding bearish-to-bullish options has surged to its highest level since August, ranking among the most negatively skewed Hong Kong stocks.