Shares of Didi Inc. plunged a significant 19.5% today. Didi Inc., a Chinese rideshare and private transport company had recently began its expansion into the U.S. markets when Chinese regulators basically stopped it in its tracks. This loss was a compounding one, adding to Monday’s loss of about 25% in total by the close.
Chinese officials have given few reasons for this regulatory move. Primary among them was national security, apparently. Prior to this week’s problems, Didi debuted with the 2nd largest U.S. IPO that a Chinese firm has ever seen. They raised more than $4 billion.
The company’s not the first tech company from China to be hit with unexpected and stringent regulations, however. Last year Chinese officials revoked Ant’s IPO. This had the effect of hitting all Chinese tech pretty hard. This was out of anticipation for other regulations coming for all of them. China imposed a fine on Alibaba Group Holding Ltd. Once it was done with a suspiciously fast investigation.
Didi Inc. became a key player in the ride-hailing market once it bought out the stake that Uber had in Chinese land. In Q4 of last year, Didi dominated with 88% of all rides taken in China.
COVID hit Didi too, unfortunately. It reported a net loss of over $1.5 billion and filed as much with the U.S. Securities and Exchange Commission. 2021 seems to be treating the company better so far. They reported $837 million in profit for the very first quarter of this year.
The company is reported to be looking into diversifying its portfolio with options in food delivery and auto repair and maintenance.
Morgan Stanley, JPMorgan Chase & Co, and Goldman Sachs Group Inc. have been leading the IPO from last week. Didi appointed 20 advisers to manage their own IPO. MetaNews has its eyes on the growth of this company, despite the regulatory actions of Chinese officials. Shares of Didi Inc. plunged a significant 19.5% today.