Didi: Why this Chinese ride-hailing giant wants to delist from NYSE?

Highlights 

  • Chinese ride-hailing service provider Didi Chuxing said on Friday that it plans to delist its stock from the New York Stock Exchange.
  • The company’s decision to delist its shares has come within six months of listing following the adoption of new rules by the US stock market regulator, making it mandatory for the company to disclose information to auditors.

Chinese ride-hailing service provider Didi Chuxing said on Friday that it plans to delist its shares from the NYSE (New York Stock Exchange) and has started preparation to list its shares on the Hong Kong stock exchange instead.

The company got listed on the US stock exchange in June 2021 through an initial public offer (IPO) which valued its shares around USD 77 billion after listing. The sudden move by the company to delist its share is likely to anger shareholders who have invested in the company as it was considered one of the most successful start-ups.

Didi App

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The company decided to delist its shares within six months of listing following the adoption of new rules by the US stock market regulator, which makes it mandatory for the foreign entity listed in the US stock market to disclose information to auditors and failing to do so might lead to the delisting of the company. The company said the shares listed on the US stock exchange would be converted into freely tradable shares on another stock exchange.

Didi Chuxing

The company operates the app-based ride service in China and 16 other countries. As per the company, it has more than 15 million drivers and over 500 million users. The company gave a tough challenge to its American rival, Uber, in China and eventually bought Uber’s Chinese operations in 2016, leading to market dominance in China. Moreover, the company plans to develop driverless car technologies in the future.

Confrontation with the Chinese regulator

The Chinese regulator has earlier advised the company not to list its shares on the US stock exchange. The regulator feared the listing would lead to the transfer of sensitive data of Chinese residents to the United States. However, the company didn’t listen and went ahead with the IPO, after which the regulatory crackdown on the firm started.

Two days after the IPO listing, the company was told to stop the new user registration amid cybersecurity concerns. Later, officials ordered a halt on the download of the company’s consumer-facing apps from the app store. Many apps like its finance app, car-pooling app and corporate customers app were also halted from downloads. The officials said the service was suspended due to issues related to personal data collection and its use.

The Chinese regulator has taken some stern steps on the technology companies in the last few months, as the crackdown on the video gaming industry and the curb on the after-school education industry.

Ever since its listing on the New York Stock Exchange, Didi’s shares have underperformed on shareholder expectations. The company’s share currently trades around USD 7.80 with a market cap of USD 38 billion, which is significantly lower compared to the IPO price of USD 14 and a market cap of USD 77 billion.

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