This is a classic investor’s dilemma: bet on the underdog with higher risk–reward potential, or ride the major trend with more stability but possibly less upside. Let’s unpack both sides using your Meituan (03690) vs. Alibaba (BABA) example.
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1. The Underdog Play – Meituan
Why consider it:
After sharp drawdowns, valuations may be compressed, offering larger rebound potential if fundamentals recover.
The CEO’s framing — “thrilling to be the underdog” — underscores management’s willingness to fight for market share, innovate, and possibly surprise on the upside.
For contrarians, buying quality companies during periods of pessimism can yield outsized returns.
Risks:
Profit pressure may persist due to food delivery price wars and subsidy-heavy strategies.
Competition (Douyin, Alibaba’s Ele.me, etc.) is fierce and margins thin.
Sentiment recovery can take time, and the stock may languish before upside materialises.
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2. The Major Trend Play – Alibaba
Why consider it:
Post-earnings jump (+12%) shows strong investor confidence in its restructuring, AI and cloud growth, and cost discipline.
Riding with the major trend means you are aligned with momentum, which is powerful in markets.
Safer capital preservation: large-cap leaders like Alibaba are less likely to face existential risk compared with underdogs.
Risks:
After a sharp rally, some upside may already be priced in.
Regulatory and geopolitical overhangs remain (US-China tech tensions, domestic policy).
Risk–reward skews lower if entering after a surge.
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3. Risk–Reward Framing
Underdog (Meituan) = High risk, high potential return. Great if you believe in turnaround capacity and are willing to tolerate drawdowns.
Major Trend (Alibaba, Nvidia analogy) = Lower risk, steadier return. Safer if you want to preserve capital and compound gradually, but with capped upside after big runs.
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4. Investor Personality Fit
If you are aggressive/contrarian: You may lean towards Meituan, treating it as a speculative bet within a diversified portfolio.
If you are defensive/pragmatic: You may prefer Alibaba, where you benefit from momentum without betting against the tide.
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✅ My view: A balanced strategy can make sense — allocate a core position to the major trend (Alibaba) for stability, while keeping a smaller satellite bet on the underdog (Meituan) to capture asymmetric upside if the rebound materialises.
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