Tech

Didi stocks plunge as traders react to China’s crackdown

The trader is working on the New York Stock Exchange (NYSE) floor in New York City, USA on June 30, 2021 during the IPO of Chinese ride-hailing service company Didi Global Inc.

Brendan MacDermid | Reuters

Ridehaling giant Didi’s stock plunged 25% in pre-market trading on Tuesday. It’s been less than a week since the Chinese app was listed on the New York Stock Exchange.

The company’s share price fell to $ 12.06 in pre-market trading at 4:46 am on Tuesday, down from the previous closing price of $ 15.53.

Fall is after China announced late Friday that new domestic users would not be able to download the app while conducting its cybersecurity review.

Traders who couldn’t buy or sell stocks on Monday responded to Tuesday’s news as the market closed.

Diddy was listed on the New York Stock Exchange last Wednesday and had a market capitalization of approximately $ 68 billion. The company’s share price rose nearly 16% on Thursday and fell just over 5% on Friday.

The fall in Diddy’s share price on Tuesday cites people familiar with the issue on Monday as the Wall Street Journal cites Diddy to postpone the listing in the U.S. and review network security a few weeks before it goes public. After being advised by Chinese regulators.

Diddy didn’t immediately respond to CNBC’s request for comment.

Kendra Schaefer, a partner at Beijing-based strategic advisory consultancy Trivium China, told CNBC’s Squawk Box Europe on Tuesday that Didi “should definitely consider withdrawing its IPO.”

She added that companies like Diddy have a huge government department that is in regular contact with regulators.

Regulators may not have given Diddy “clear instructions,” she said, “maybe we’re facing investor pressure because we’re not really sure in which direction Diddy will jump. Is absolutely there. “

China has begun cracking down on tech giants after years of relatively low regulation. After announcing the Didi probe, Chinese regulators published a cybersecurity review to US-listed Boss Zhipin and Full Truck Alliance subsidiaries.

In June, Reuters reported that Chinese regulators were investigating Diddy for antitrust violations. Beijing is also reportedly considering its pricing mechanism.

Diddy warned in an IPO prospectus that he could be punished by dissatisfied regulators.

“We cannot guarantee that regulators will be satisfied with the results of our self-inspection or will not be penalized for anti-monopoly, anti-unfair competition, pricing, advertising or breach of privacy protection. Safety, product quality, taxes and other relevant laws and regulations. We look forward to more attention and oversight from regulators and the general public in these areas. “

Founded in 2012, Didi states that it has 439 million active riders annually and an average of 41 million transactions per day. We started international expansion in 2018 and are currently expanding our business in 14 countries other than China.

In addition to traditional ride hailing, Diddy has invested heavily in enabling autonomous taxis and operates several segments of mobility.

— — Additional report by Steve Kovach and Jessica Bursztynsky.

Didi stocks plunge as traders react to China’s crackdown

Source link Didi stocks plunge as traders react to China’s crackdown

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