GOP Sen. Marco Rubio slams Didi’s US listing as ‘reckless and irresponsible’ – and calls it an unaccountable Chinese company

marco rubio ufo report
Sen. Marco Rubio, R-Fla.

  • Sen. Marco Rubio blasted the “reckless and irresponsible” decision to grant Didi’s US listing in an FT interview.
  • He called Didi “unaccountable” as China’s government blocks US regulators from reviewing its accounts.
  • “That puts the investments of American retirees at risk and funnels desperately needed US dollars into Beijing,” Rubio said.
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Sen. Marco Rubio slammed the “reckless and irresponsible” decision to allow Chinese ride-hailing app maker Didi to list its shares on the New York Stock Exchange, speaking in a statement reported by the Financial Times Wednesday.

Rubio, one of the US government’s most vocal China critics, described Didi as an “unaccountable Chinese company,” and said Beijing’s regulatory crackdown on the tech provider, which sent the stock lower, highlights the risks for US investors.

Didi’s share price plunged more than 19% on Tuesday, after Chinese authorities at the weekend ordered app stores to remove its app from their platforms. The country’s internet regulator earlier launched a review of its data security, and ordered it to stop registering new users.

“Even if the stock rebounds, American investors still have no insight into the company’s financial strength because the Chinese Communist party blocks US regulators from reviewing the books,” Rubio told the FT. “That puts the investments of American retirees at risk and funnels desperately needed US dollars into Beijing.”

The type of business structure used by Didi “deprives foreign investors of vital legal protections they would otherwise enjoy through equity ownership,” the Council of Institutional Investors said in a 2017 paper.

The Republican senator’s comments suggest that Didi’s IPO saga could fuel new efforts by US lawmakers to place tougher hurdles in the way of Chinese companies seeking listings in the US.

Last year, former President Donald Trump signed legislation that banned Chinese companies from being listed on US markets unless they conformed to American accounting standards.

The “Holding Foreign Companies Accountable Act” applies to companies from any country, but the sponsors of the law are seen as targeting it at Chinese companies listed in the US, such as Jack Ma’s Alibaba, tech firm Pinduoduo, and oil giant PetroChina.

Didi’s stock was last trading 4% lower in the pre-market session on Wednesday around 6.30 a.m. ET at $11.97 per share.

Read More: Goldman Sachs names 30 stocks to buy for double-digit revenue growth in 2022 – and 4 sectors expected to beat the S&P 500’s sales growth

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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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Chinese regulators will tighten controls of domestic firms listed overseas following a cybersecurity probe of Didi

A Didi logo is seen at the headquarters of Didi Chuxing in Beijing, China November 20, 2020. REUTERS/Florence Lo/File Photo/File Photo
A Didi logo is seen at the headquarters of Didi Chuxing in Beijing on November 20, 2020.

  • Chinese regulators said they will tighten control of domestic firms listed overseas.
  • The move came after the Beijing-led cybersecurity probe against Didi, Reuters reported.
  • On Sunday, China said Didi “has serious violations of laws and regulations” in collecting and using personal information.
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Chinese regulators on Tuesday said they will tighten control of domestic firms listed overseas following a recent cybersecurity probe launched by Beijing against ride-hailing giant Didi Global, Reuters first reported.

China officials said they will ramp up the regulation of cross-border data flow, tighten measures on illegal activities in the securities market, and check the sources of funding for securities investments and control leverage ratios, according to Reuters, citing a statement by China’s cabinet.

Fraudulent securities issuance, market manipulation, and insider trading will all be punished, the statement also said.

The announcement comes after the probe of ride-hail giant Didi, which made its US debut on the New York Stock Exchange on June 30.

On Sunday, the Cyberspace Administration of China said that its investigation found that the Didi app “has serious violations of laws and regulations” in collecting and using personal information.

App stores were notified to remove Didi and “strictly follow the legal requirements.”

Didi, the world’s second-largest ride-hailing app by market valuation, said it would comply and make necessary changes.

Didi shares slumped as much as 25% in premarket trading Tuesday, days after its more than $4 billion listing in what was seen as the biggest US share offering by a Chinese firm since Alibaba’s IPO in 2014.

Weeks before, China had already urged Didi to delay its initial public offering, the Wall Street Journal reported.

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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

Uber’s investment in Didi could help unlock 40% upside potential in the US ride hailing giant’s stock, Bank of America says

Uber
  • The IPO of Chinese ride-hailing company Didi could help unlock value for shares of Uber, according to Bank of America.
  • Uber owns a 12% stake in Didi, which hit a valuation of about $80 billion on its first day of trading on Wednesday.
  • BofA’s $71 price target for Uber represents potential upside of 40% from Thursday’s close.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The recent IPO of Chinese ride-hailing giant Didi could help unlock value in shares of Uber, Bank of America said in a note on Friday.

The bank argued that Uber’s 2016 investment in Didi is now worth almost $10 billion. Uber owns about 12% of Didi, which touched a valuation of nearly $80 billion in its first day of trading on Wednesday. Uber had most recently pegged the value of its Didi stake at $5.9 billion, meaning there is upside to Uber’s assigned asset value that could help boost the stock price.

“Based on 1.9 billion shares outstanding for Uber, we estimate that translates to an incremental ~$2 per share in equity value for Uber,” BofA explained.

The bank rates Uber at a “Buy” and has a $71 price target, representing potential upside of 40% from Thursday’s close. And there’s even further room higher based on a sum-of-the-parts valuation, in which the BofA assigns a $90 per share value for Uber. A move to $90 would represent potential upside of 78%.

Despite BofA’s bullish outlook for Uber, the stock has considerably underperformed its peers like Lyft and DoorDash year-to-date. Shares of Uber are down 1% year-to-date, while Lyft and DoorDash are up about 27% and 26%, respectively.

The bank highlighted four overhangs the stock is currently facing, including a large seller of Uber stock in June that may have impacted supply and demand dynamics, Uber’s guidance suggesting bigger driver incentives, Uber’s international exposure, and a larger-than-expected UK driver settlement amount.

“While it’s hard to say if any one of these issues is the core drive for Uber’s relative underperformance, we reiterate our Buy rating as we think some of the overhang could clear in 3Q with further reopening and vaccination progress,” BofA said.

The bank expects Uber to reach breakeven profitability by the end of the year.

Read more: Bank of America names 5 semiconductor stocks to buy for the 2nd half of 2021 – and breaks down why each has ‘catch-up potential’ after lagging since January

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US stocks close mostly higher to finish one of the strongest first halves of the year since 1998

NYSE Trader smile happy

US stocks were mostly higher on Wednesday with weakness in tech stocks weighing on the Nasdaq. Wednesday marked the end of one of best first six months of the year for the S&P 500 since 1998, up 14% year-to-date.

Investors are now mulling how strong economic data will influence the Federal Reserve’s accommodative policy stance. Wednesday morning the ADP Employment report showed the US added 692,000 private payrolls in June, higher than the 600,000 expected. All eyes will be on to the Labor Department’s non-farm payrolls data for June set to be released on Friday.

Here’s where US indexes stood at the 4 p.m. ET close on Wednesday:

One of busiest week for initial public offerings this year is underway, with Didi soaring as much as 28% in its public debut Wednesday. Didi is the largest public debut for a Chinese company since Alibaba in 2014. Meanwhile, shares of LegalZoom popped as much as 39% in the first day of trading while cybersecurity company SentinelOne popped as much as 30%.

There have been 209 IPOs priced this year, a 226.6% change from the same date last year, per Renaissance Capital.

Retail trading activity in the US has cooled from its pandemic peak but still makes up 10% of stock trading volume on the Russell 3000, a broad benchmark of US stocks, according to a recent note by Morgan Stanley.

Bitcoin slipped 4% to $34,727 as the cryptocurrency struggles to rally higher amid a crackdown in China. The coin is finishing the first half of 2021 up 18%.

West Texas Intermediate crude rose 0.73%, to $73.52 per barrel. Brent crude, oil’s international benchmark, gained 0.49% to $75.13 per barrel.

Gold hovered around $1771 per ounce.

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Didi soars 28% in largest IPO debut for a Chinese firm since Alibaba, valuing ride-hailing firm at $86 billion

Didi Chuxing's D1 at the launch event in Beijing on November 16, 2020
President of Didi Liu Qing and CEO of DiDi Cheng Wei and at the D1 launch event in Beijing on November 16, 2020.


Shares of Didi soared as much as 28% in its IPO debut on Wednesday, lending the Chinese ride-hailing platform a valuation of about $86 billion.

The firm priced its IPO at $14 per share and raised about $4.4 billion in proceeds, making it the largest IPO for a Chinese firm since Alibaba in 2014. At the IPO price, Didi was valued at about $67 billion. The company sold 317 million shares, and had guided for an IPO price range of $13-$14.

Didi is the second largest ride-hailing app by market value in the world. Uber currently sports a valuation of about $93 billion, while Lyft trades at a $20 billion valuation.

The company generated $1.6 billion in losses on $21.6 billion in revenue in 2020, representing a year-over-year revenue decline of about 10% due to the COVID-19 pandemic, according to its SEC filings.

Didi sports a number of high profile investors, including Apple, which invested $1 billion in the ride-hailing company in 2016. Meanwhile, the SoftBank Vision Fund holds a 21.5% stake in Didi, while Uber and Tencent own a 12.8% and 6.8% stake in the company, respectively, according to Bloomberg.

Whether US investors will have a strong appetite for shares of Didi over the long-term is still up in the air, as some investors have been burned before by high profile IPOs of Chinese companies. Last year, Starbucks competitor Luckin Coffee plunged more than 80% after it admitted to fabricating $310 million in sales. The Chinese-based coffee chain eventually filed for Chapter 15 bankruptcy.

Additionally, both the Trump and Biden administration have followed through with banning certain Chinese companies from US stock market exchanges.

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Didi’s IPO will not make investors any money and the business is just as unprofitable as Uber and Lyft, a veteran stock analyst says

Didi Chuxing's D1 at the launch event in Beijing on November 16, 2020
CEO of DiDi Cheng Wei at the D1 launch event in Beijing on November 16, 2020.

  • Didi’s IPO will not make investors any money, said David Trainer, CEO of investment research firm New Constructs.
  • The Chinese ride hailing app jumped as much as 28% during its public debut Wednesday afternoon.
  • Trainer, however, says the unprofitable company faces stark competition, regulatory risk, and low margins.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investors should steer clear of Chinese riding hailing company Didi following its IPO, a veteran stock analyst said.

The company jumped as much as 28% to $18 a share when it began trading on the New York Stock Exchange Wednesday afternoon. It priced an upsized offering of 316.8 million shares at $14, the top of its range.

To New Constructs CEO David Trainer, even the mid-range of Didi’s IPO price was too high.

“At a $65 billion valuation, we do not think investors should expect to make any money in Didi’s IPO,” he said in a recent note.

The veteran equity analyst said the company is worth no more than $37 billion, and Softbank, one of its largest backers, needs the IPO more than investors do.

Trainer’s analysis stems from the fact that at a valuation near or above $65 billion, Didi will account for 41% of the world’s ride sharing and food delivery market. He doesn’t expect the company to hit that given the vast competition for market share. Additionally, Trainer sees Didi’s business model as just as unprofitable as Uber and Lyft. Didi has an estimated 90% of market share in China, yet hasn’t generated a profit yet, and saw losses accelerate during the pandemic, he added.

“Uber and Lyft have shown investors that ride sharing is not a profitable business because of intense competition, low margins, and a lack of differentiation between services,” Trainer said.

He also doesn’t see Didi’s business model evolving as quickly as some investors forecast.

“While bulls claim that autonomous vehicles will ultimately eliminate driver costs, such a reality is years away at
best,” Trainer said. “In the meantime, Didi will continue to offer services below cost and provide driver incentives to attract drivers to the platform, even at the detriment of profitability.”

The analyst also warned that Didi is at risk of increased regulation in China. In a filing, the company outlines that its business may be subject to heightened regulatory scrutiny by the Chinese government, Trainer said.

He pointed to a Reuters report from June that the State Administration for Market Regulation (SAMR) has begun an antitrust probe into Didi Global, specifically looking at whether the firm used “competitive practices that squeezed out smaller rivals unfairly.” The SAMR also fined Didi in May for violating anti-monopoly rules.

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