China did not waste any time cracking down on the popular ride-hailing company Didi. Didi stocks crash after this crackdown. This is a big deal for the United States because Didi’s IPO had raised $4.4 billion in U.S. dollars earlier this month–which was the second-largest IPO ever by a Chinese company to date! The company’s shares reached a low of $11.58 in morning trading, down 25% from their last close at ($15.53).
In response, China ordered all of Didi’s platforms removed from app stores and did not allow new drivers to join or old ones to renew their cars, which caused shares of didi global inc., stock DIIQA, to plunge 25% early Tuesday morning (taking its stock price below its 14 dollar IPO). The Cyberspace Administration of China barred didi from operating online pending its investigation.
Investors response to Didi Stocks Crash:
Investors were frustrated by the news, as they were unable to buy or sell shares of the company Monday due to China’s national holiday. Shares in other Chinese companies listed on US stock markets also fell Tuesday, with BAIDU dropping 1.7%, JD down 3.5%, and ALIBABA slipping 2%.
“We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we have not been subject to any penalty as a result of violations against anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, and product quality laws,” the company said in its prospectus.
The history behind Didi as a company:
Didi is the largest ride-sharing company in China, with over 100 million active monthly users. Didi has grown to dominate the market since it was founded in 2012 and did not allow other companies to operate on its platform until 2016 when it did a deal with Uber. The merger did not last–Uber left China back in August of this year after they were unable to complete an acquisition from Didi’s rivals, Kuaidi Dache.
The company went public as did (DIIQA) earlier this month and raised $400 billion USD, making them second only to Alibaba for IPO size by Chinese firms so far this century!
We have to wait to and see if someone can push it back up, like Elon Musk does to Dogecoin.