Some business segments, including hotel bookings, are already profitable, which proves that previous investments can yield positive returns, Chen said in an interview on Tuesday. “We need to think long-term and see the value in our losses. In 2019 we plan to increase investments in food-related services, while cutting investments in non-food segments.”

Yet, investors were uncertain of Meituan’s path to profitability as its Hong Kong-listed shares plunged 11.12 per cent to close at HK$52.35 on Tuesday.

A key contributor to the losses was dockless bike sharing firm Mobike, which Meituan acquired in April for US$2.7 billion. The unit was responsible for a loss of 4.55 billion yuan, over half of the adjusted net losses for Meituan in the 2018 financial year, excluding changes in fair value.

The losses from Mobike are expected to be “significantly narrowed” in 2019 compared to last year, Chen said, because most of the bike-sharing unit’s international operations will be shut and improvements made to the operational efficiency in the home market.

“The synergy between Mobike and Meituan’s existing business is limited, hence it makes commercial sense for the company to shift focus back to the domestic market,” said Ke Yan, co-head of research at Aequitas Research, adding that Mobike will continue to burn up to 5 billion yuan a year just for upkeep of the bike fleet.

In the food delivery segment Meituan, backed by Chinese tech giant Tencent Holdings, has been engaged in a costly battle for market share with Alibaba-backed Ele.me. Alibaba is the parent company of the .

Meituan’s food delivery business reported a 66.1 per cent year-on-year increase in revenue to 11 billion yuan in the fourth quarter. The company increased its subsidies in the fourth quarter to hold onto customers against its main rival, but the growth rate of food delivery orders slowed to 35 per cent.

Chen said slower growth will be the trend over the long term for the food delivery industry because the explosive growth of the past few years was mostly driven by expansion into new cities and bringing new users and restaurants on board.

“The explosive growth in the past was partly due to subsidies. For the next few years, we plan to shift our growth model from an extensive, subsidy-driven model to a more user experience-driven and operation efficiency approach,” Chen said.

The Chinese market is big enough to stand the competition, Chen said, as the industry was still at an early stage, with Meituan’s 400 million users accounting for less than half of China’s smartphone users. In the coming year Meituan will focus on getting new users and increasing the frequency of purchases from existing ones, he added.

Analyst Ke said the strategy of burning cash was a short cut for emerging tech companies to acquire a huge market share and cultivate user habits for further monetisation opportunities. “As the competition is still prevalent, Meituan has to be very careful raising the commission rates for its food delivery and hotel business and rely on other channels [like its restaurant management system and marketing services] to monetise merchants on its platform.”