Earlier this month, Chinese transport app Didi announced it will delist from the New York Stock Exchange after just six months. The company is preparing to move its share listings to Hong Kong, though there is no set date for the change yet.
After announcing its intentions to withdraw from the US stock market, Didi confirmed that it’s lost billions since Beijing’s crackdown started.
As of September, the ride-hailing app had a cumulative operating loss of $6.3 billion for 2021. It also reported a 5% loss in revenue and a 16% increase in spending for the third quarter.
Didi boasted a $4.4 billion IPO, with its market cap reaching $68.2 billion after it went public in June 2021. Since then, the company has lost more than 60% of its value, closing the year with a $25.18 billion valuation.
In an attempt to do damage-control, Didi prohibited its employees from selling their shares. Initially, the restriction was meant to last 180 days, though the company announced on December 27 that it would be extended indefinitely.
The Repercussions of China’s Scrutiny
Beijing has been breathing down Chinese tech companies’ necks throughout the year. Jinping’s government claims to be concerned for the safety of Chinese people’s data—especially that which is handled by companies with share listings overseas.
Unsurprisingly, Beijing came down on Didi soon after its NY IPO.
The government demanded that the private transport company improve its policies for drivers’ compensations and data governance. While Didi falls over itself to comply with Chinese regulations, the government is having online stores remove 25 of Didi’s apps.
Although it’s best known for its ride-hailing app, Didi also has a food delivery service. Lately, though, it has been investing in artificial intelligence and cloud computing—something that may have raised alarms for Beijing, too.
Competitors in the Chinese market are taking advantage of the situation, luring both drivers and riders away from Didi. Meituan, for instance, has been offering large cash bonuses to all new drivers.
However, some analysts aren’t too concerned about the situation. “Didi is still the largest player in the market and consumer switching could be temporary if Didi acts to address their concerns,” indicated consultant Guo Shan.
Still, many stakeholders are skeptical about China’s transparency and weary of its growing animosity towards tech companies.
Uber, for instance, is looking to sell its 12.8% Didi stake.