Didi’s US shares plunge 25% after China cracks down on ride-hailing app, just days after $68 billion IPO

Didi Chuxing China ride-hailing app
Didi is China’s biggest ride-hailing app.

Chinese ride-hailing app Didi dropped as much as 25% on the US stock market on Tuesday after China cracked down on the company, only days after its blockbuster initial public offering in New York.

Didi’s US-listed shares were last down 21.98% by 9.50 a.m. ET, to $12.10. US stock markets reopened on Tuesday after Monday’s 4th of July holiday.

Chinese authorities on Sunday ordered app stores to remove Didi Chuxing, the country’s biggest ride-hailing company, from their platforms. The Cyberspace Administration of China cited serious violations in the collection and use of personal data.

The crackdown came less than a week after Didi’s shares started trading on the New York Stock Exchange in one of the biggest IPOs of the last 10 years. Didi hit the market on Wednesday, with shares closing at $14.14, giving the app a market capitalization of $68 billion.

The company said China’s move to lock out new users may have an adverse impact on its revenue in its home market.

Uber, which is the second-biggest US holder of Didi stock, fell 1.82% when markets opened.

Read more: POWER PLAYERS: These 9 Uber executives are fighting the company’s increasingly messy gig-economy policy battles

Shares of Full Truck Alliance and Kanzhun, two Chinese tech companies who also recently listed in the US, dropped 19.95% and 9.38% respectively. The declines came after China expanded its clampdown to put new restrictions on the two companies on Monday.

“China is cracking down on big tech, but the decision to remove [Didi’s] app from domestic platforms appears to be timed for maximum impact and embarrassment,” said Neil Wilson, chief market analyst at trading platform Markets.com.

“China’s Communist Party is bristling at the number of Chinese companies listing in the US this year, but there is a genuine concern at the heart of this – regulators are not impressed at the way Didi and other Chinese tech companies handle data.”

Axel Springer, Insider Inc.’s parent company, is an investor in Uber.

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Didi plunges 30% in premarket trading after China cracks down on ride-hailing app, days after $68 billion US IPO

FILE PHOTO: The company logo of ride hailing company Didi Chuxing is seen on a car door at the IEEV New Energy Vehicles Exhibition in Beijing, China October 18, 2018.  REUTERS/Thomas Peter/File Photo
Didi Chuxing is China’s biggest ride-hailing app.

  • Didi shares plunged as much as 30% in premarket trading Tuesday after China cracked down on its app.
  • Didi Chuxing listed on the New York Stock Exchange on Wednesday in a $68 billion IPO.
  • Chinese authorities are taking a tough line with the ride-hailing app maker and other tech companies.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Shares of Chinese ride-hailing app maker Didi plunged as much as 30% in premarket trading on the US stock market on Tuesday, after China cracked down on the company only days after its blockbuster US initial public offering.

Didi’s American depository receipts then pared some of their losses to stand 20.99% lower at $12.27 as of 06.15 a.m. ET. US equity markets will reopen on Tuesday after Monday’s 4th of July holiday.

Chinese authorities on Sunday ordered app stores to remove apps from Didi Chuxing, the country’s biggest ride-hailing company, from their platforms. The Cyberspace Administration of China cited serious violations in the collection and use of personal data.

The crackdown came less than a week after Didi’s shares started trading on the New York Stock Exchange in one of the biggest IPOs of the last 10 years. Didi hit the market on Wednesday, with shares closing at $14.14, giving the app a market capitalization of $68 billion.

Uber, which is the second-biggest US holder of Didi stock, fell 1.37% in premarket trading.

Read more: POWER PLAYERS: These 9 Uber executives are fighting the company’s increasingly messy gig-economy policy battles

Shares of Full Truck Alliance and Kanzhun, two Chinese tech companies who also recently listed in the US, dropped 16.04% and 10.49% respectively in premarket trading. The declines came after China expanded its clampdown to put new restrictions on the two companies on Monday.

“China is cracking down on big tech, but the decision to remove [Didi’s] app from domestic platforms appears to be timed for maximum impact and embarrassment,” said Neil Wilson, chief market analyst at trading platform Markets.com.

“China’s Communist Party is bristling at the number of Chinese companies listing in the US this year, but there is a genuine concern at the heart of this – regulators are not impressed at the way Didi and other Chinese tech companies handle data.”

Axel Springer, Insider Inc.’s parent company, is an investor in Uber.

Read the original article on Business Insider

Cathie Wood says she sees potential in disruptive Chinese tech firms, even though their shares have tumbled recently

A Hisense chip is on display during the Appliance & Electronics World Expo (AWE) 2021 at National Exhibition and Convention Center (Shanghai)
  • The CEO of Ark Invest said “disruptive innovation platforms” in China were now competing with those in the US.
  • Speaking at a webinar, she said she was impressed by China’s commitment to driving innovation.
  • Chinese tech stocks are down, having been sold off heavily this month in volatile trade.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cathie Wood, the CEO of Ark Invest, said she sees growth potential in “disruptive innovation platforms” in China and that they are competing with similar ventures in the US now. Chinese tech stocks have been trending downwards recently as they face legal and regulatory pressure.

Speaking at a webinar in collaboration with Li Yimei, chief executive of China Asset Management this month, she discussed China’s commitment to innovation and said the country’s platforms have made huge progress in area such as DNA sequencing, energy storage, artificial intelligence, blockchain and robotics, especially relating to productivity, “which is good for the entire economy,” IgnitesAsia quoted Wood as saying.

Wood, through her ARK Invest exchange-traded fund, was one of the top performing asset managers of 2020, thanks in large part to her bets on disruptive technology.

She said many Chinese platforms are now close competitors to those in the US, after having caught up in recent years. “Competition in technology is a really good thing, in terms of moving the technology forward faster than otherwise would have been the case,” she said.

She said she was impressed with the government’s collaboration with the private sector, as she believes this will further the development of microchips and artificial intelligence.

Wood also said it reflected the government’s commitment to electric vehicles “I’m very impressed that China allows Tesla into the country without a local manufacturer. It is so determined to have electric vehicles proliferate throughout China,” she said.

Chinese tech shares have tumbled recently. The Hang Seng Tech index, which contains a number of big Chinese tech names such as Alibaba, Tencent, and FoxConn, is one of the worst performers from among the major indices this year, with a loss of almost 3%, versus a 1.5% gain in the tech-heavy Nasdaq 100.

Performance has been highly volatile for months, as tech stocks are impacted by legal and regulatory changes. Recently, the sector fell after news of a potential government-backed company designed to oversee tech data. Tensions between the US and China and a “Cold Tech War” were also major risk factors, Wedbush analyst Dan Ives said on Monday.

Wood’s Ark Invest published a note this week saying “Chinese technology companies are caught in political crosscurrents”, referring to the developments that have been causing stocks to crash. Ark Invest believes they will only cause “short term turmoil” and said “policies might accelerate or hinder the pace of innovation for a time, but we believe self-preservation probably will bring policymakers back to both tables.”

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China’s Didi Chuxing is eyeing a mega-IPO next quarter that values the ride-hailing service above $62 billion, report says

Didi Chuxing's D1 at the launch event in Beijing on November 16, 2020
Didi Chuxing’s D1 at the launch event in Beijing on November 16, 2020.

  • China’s Didi Chuxing is speeding up plans for its market debut and targeting a valuation above $62 billion.
  • The ride-hailing firm is targeting the summer of 2021 for its IPO, rather than the latter part of the year, Bloomberg said.
  • Japanese conglomerate SoftBank is Didi’s single largest existing investor.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Chinese ride-hailing firm Didi Chuxing is said to be speeding up plans for its initial public offering to make the most of the post-pandemic environment, according to Bloomberg.

Didi is aiming for an IPO as early as this summer, at a valuation above the $62 billion it secured at its last funding round, making it one of China’s most valuable tech firms, Bloomberg said, citing sources.

The company brought forward its IPO plans by a quarter, owing to China’s lead in controlling the COVID-19 crisis. It was previously targeting late 2021. But plans are in early stages, timing is still uncertain, and a venue for its market debut hasn’t been decided yet.

If Didi lists its shares in Hong Kong, the company could raise about $9 billion, potentially making its IPO one of the largest tech debuts of 2021, Bloomberg said.

Japan’s SoftBank, the biggest investor in China’s ride-hailing leader, would count Didi’s IPO as another victory, after profiting from a number of other high-value market debuts including Coupang and DoorDash.

The company is also said to be expanding its business by pushing into European markets. Bloomberg reported last month it could roll out its ride-hailing service in the UK, France, and Germany by the first half of 2021.

Didi didn’t immediately respond to Insider’s request for comment.

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