Never Ending Spiral: DiDi Stock Falls as SEC Investigates IPO
2022.05.04 13:56
Never Ending Spiral: DiDi (DIDI) Stock Falls as SEC Investigates IPO
Chinese ride-hailing company DiDi Global (NYSE:DIDI) is being investigated by U.S. regulators over the company’s disastrous initial public offering last year.
In a regulatory filing issued this week, DiDi said it is cooperating with the US Securities and Exchange Commission (SEC) on its investigation of DiDi’s IPO last year, “subject to strict compliance with applicable PRC laws and regulations.”
“We cannot predict the timing, outcome or consequences of such an investigation,” DiDi said.
DiDi launched a long-awaited $4.4 billion IPO on the New York Stock Exchange in June 2021, the biggest share offering in the U.S. by a Chinese company since Alibaba’s IPO in 2014.
Just a few days after the offering, Chines authorities banned DiDi from app stores in the country and opened an investigation into the company’s customer data practices. The Cyberspace Administration of China then accused the ride-hailing giant of breaching privacy laws and posing significant cybersecurity risks. Many viewed Bejing’s actions as a way to punish DiDi for going public in the U.S. instead of China.
This unexpected twist significantly hurt DiDi’s investors, with the company’s shares plummeting nearly 20% on its first trading day after the ban.
The U.S. regulators have been approaching Chinese IPOs with more caution ever since, with the SEC instructing its staff to demand more disclosures from Chinese firms looking to go public in the U.S. before granting them approval to list in the country.
The regulatory clampdown by the Chinese government hurt DiDi’s domestic operations as well, with the company incurring a $4.7 billion loss in the third quarter of 2021, while its revenue fell 1.7% from the year-ago period.
In December 2021, the ride-hailing company said it would delist from the New York Stock Exchange and seek to list its shares in Hong Kong. However, recent reports noted that DiDi paused its Hong Kong listing plans.
By Senad Karaahmetovic
