Chagee Releases Q4 2025 Results, Awaits Key Metric Updates Amid Domestic Weakness

What happened

Chagee announced its unaudited fourth quarter and full year 2025 financial results on March 31, 2026, providing a crucial update after a period of operational strain highlighted in the DeepValue report. The report, based on Q3 2025 data, shows severe deterioration with Greater China same-store GMV growth at -27.9% and operating margin compressed to 14.2%, driven by food-delivery platform subsidy competition and rising G&A expenses. With a WAIT rating and a re-assessment window of 3-6 months, the investment thesis hinges on domestic demand stabilizing to reverse margin erosion and overhead deleveraging. Investors must now analyze the new results for signs of improvement in same-store GMV and operating margin, which are critical thresholds for shifting the call. Without immediate disclosure of these metrics in the announcement, the market remains in a holding pattern, awaiting detailed data to confirm or challenge the bearish trends.

Implication

The Q4 results announcement introduces a pivotal data point for evaluating Chagee's turnaround efforts, with the DeepValue report setting clear benchmarks: same-store GMV must improve from -27.9% and operating margin exceed 18% to support a bullish shift. If the results show continued weakness, the bear case becomes more probable, potentially driving the stock toward the $8 implied value amid sustained margin compression and overhead costs. Conversely, positive surprises could catalyze a re-rating toward the bull case of $16, but historical deterioration and competitive pressures warrant skepticism until concrete improvements are verified. The company's substantial cash buffer of RMB9.1 billion offers downside protection, but operational risks dominate, requiring careful monitoring of franchise economics and overseas growth. Ultimately, the next 90-day checkpoints will determine whether to exit, resize, or add positions based on sequential metric trends.

Thesis delta

The investment thesis remains unchanged pending analysis of the Q4 2025 results, as the DeepValue report's WAIT rating and key thresholds have not yet been tested with new data. Any shift will depend on whether Greater China same-store GMV shows sequential improvement from the Q3 -27.9% level and operating margin rebounds toward or above 18%, failing which the bear scenario gains credibility and the rating could deteriorate.