DiDi Shares Explode 50% on Report China is Set to Remove Ban on New Users
2022.06.06 13:02
DiDi (DIDI) Shares Explode 50% on Report China is Set to Remove Ban on New Users
By Senad Karaahmetovic
China’s regulators are set to remove the ban on Didi Global (NYSE:DIDI) and two other tech companies listed in the U.S. which prevented them from adding new users, marking the end of the years-long investigation, according to the Wall Street Journal.
In addition, the regulators will also let Didi, Full Truck Alliance (NYSE:YMM), and Kanzhun (NASDAQ:BZ) mobile apps return to domestic app stores this week, almost a year after being removed from the stores when watchdogs started a data-security investigation of the companies due to national security concerns.
The late worries over a significant slowdown in China’s economy have urged the authorities to halt their clampdown on local tech companies and their data.
In June 2021, three Chinese companies debuted on the U.S. stock exchanges, raising a total of $7 billion through their IPOs. However, not long after going public, the Chinese regulators started a probe into the companies, with Didi being particularly battered.
The ride-hailing giant saw its market value plunge over just a few months. As a result, the company decided to delist from the New York Stock Exchange less than a year after its debut.
Chinese authorities and executives of Didi, Full Truck Alliance, and Manbang Group reportedly met last week where they discussed the plan to conclude the probes. The three companies are expected to pay financial fines – including a relatively large penalty for Didi.
According to the reports, the three companies will also offer 1% equity stakes to the government and award them a direct role in their business decisions.
HHSC Assets’ Chen Da believes the tech crackdown in China could be in the final stages after today’s news.
“The news comes like the crack of dawn for ADRs and tech stocks. The probe into Didi was an important incident last year, which started the downward spiral for Hong Kong tech shares and ADRs – – so a conclusion of this is necessary to end the troubles,” Da told Bloomberg.
DiDi shares are up 53% in pre-open Monday after plunging roughly 89% since July.
