Shares of Meituan, a leading Chinese food delivery company, fell over 5% on Friday following CEO Wang Xing’s warning about a potential slowdown in food delivery in the next quarter.

During an earnings call, Wang stated that while they expect a decrease in food delivery volume in the third quarter, it will still be more resilient compared to other consumption-related sectors.

Despite the warning, Meituan reported strong second-quarter results, with a revenue of 67.96 billion Chinese yuan ($9.33 billion), up 33.4% from the same period last year. The company also turned a profit of 4.69 billion Chinese yuan, compared to a loss in the previous year.

Wang attributed the short-term headwinds to the macro economy and extreme weather conditions, such as heavy rain and flooding in certain regions of China.

The extreme weather had a significant impact on Meituan’s business, causing many merchants to suspend operations and consumers to opt for packaged food instead of fresh food delivery. In some cities, food delivery services were even suspended to ensure safety.

Meituan holds almost 70% of the food delivery market share in China, making it the industry leader. However, the company also operates other services including ride-hailing, on-demand delivery, hotel and travel booking, movie ticketing, and entertainment.

Xiaolin Chen, head of international at KraneShares, expressed optimism about Meituan’s future. The investment firm has set a price target of 205 Hong Kong dollars ($26.14) on the stock, representing a 35.2% potential upside.

Chen believes that Meituan’s market share gained during the pandemic, particularly in lower-tier cities, will remain strong. However, Wang acknowledged that as the economy recovers, consumers may dine out more frequently, leading to a temporary decrease in food delivery demand.

Fitch Ratings predicts China’s gross domestic product to grow 5.6% in 2023, slightly higher than the government’s target of around 5%. Meituan’s CEO expressed confidence in the long-term growth of the company’s food delivery business, despite a temporary slowdown caused by external factors.

Meituan is also embracing autonomous delivery vehicles, which have been increasingly utilized in various scenarios. The company is exploring the use of artificial intelligence and cutting-edge technologies to enhance costs and services.

In addition, Meituan has expanded to new markets outside mainland China, launching a sister app in Hong Kong in May.