AUS
NZ
UK
CA
USA
IND
_07_12_2023_11_05_52_936360.jpg)
Summary
- Ride hailing firm Didi Global Inc’s shares dropped 5.3% to USD$15.53 on Friday.
- The stock declined after China ordered removal of “DiDi Chuxing” app from the country’s smartphone app stores.
- The development came two days after Didi made its debut on the New York Stock.
China’s biggest ride hailing company Didi Global Inc (DIDI.N) shares fell as much as 11% to USD$14.60 on Friday, days after logging one of the biggest US initial public offerings (IPO) of this decade. The Didi stock price plunged after China launched a cybersecurity probe against the company and ordered its removal from the country’s smartphone app stores. Paring half of losses, the stock closed 5.3% lower at USD$15.53 on Friday.
Ironically, the development came two days after Didi Global made a debut on the New York Stock Exchange at the market value of USD$68.49 billion, marking the biggest US listing by a Chinese company since Alibaba raised USD$25 billion in 2014. The ride hailing giant had raised USD$4.4 billion in a mega New York IPO.
Why did China ban ride hailing app Didi?
Image: © Kaspiic | Megapixl.com
China’s cyber security regulator, Cyberspace Administration of China (CAC), issued a statement on Friday evening, saying that it had launched an investigation into Didi over "cybersecurity" concerns and "to safeguard national data security and protect national security". The watchdog, however, did not disclose the details about the security risks, but mentioned that new users would not register for the service during the investigation period.
Two days after launching a cybersecurity probe, the CAC on Sunday ordered the removal of Didi Chuxing from China's smartphone app stores, alleging that the company illegally collected users' personal data, without disclosing details.
The regulator also directed the company to “rectify existing problem” to comply with Chinese data protection rules.
Responding to the regulator’s action, Didi said it would carry out rectifications to protect user privacy and data security. The suspension will not impact those users who have already downloaded the app and they can continue to use it.
In recent months, China has tightened its regulatory crackdown over internet data in the name of national security, which has impacted some big players like Alibaba and Meituan.
How will the Chinese ban impact Didi?
China's tech giant has said that removal of its "DiDi Chuxing" app from app stores will hurt its revenue. The move will lead to suspension of new registration in China where the company has a dominant position in the online ride-hailing business. The company operates in 4,000 locations across 16 countries and has more than 490 million annual active users, as per a recent regulatory filing.
Founded in 2012 as a taxi-hailing app, the company now offers private car-hailing, sharing bikes, delivery, freight and logistics, and financial services.
Backed by tech investment giants such as Alibaba, Tencent and Uber, the company turned profitable for the first time in the March quarter of this year. The company posted a profit of USD$30 million in the first quarter of this year, while revenue stood at USD$6.5 billion. More than two-thirds of the revenue came from its China mobility business while remaining from its international business. Last year, the company had reported a loss of USD$1.6 billion and revenue at USD$21.63 billion.
