Why did DiDi stock nosedive more than 20% today?

2 min read | July 07, 2021 04:53 AM AEST | By Team Kalkine Media

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Why did DiDi stock nosedive more than 20% today? — Image source: DANIEL CONSTANTE,Shutterstock

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DiDi Global Inc. (DIDI) stock fell more than 20% on Tuesday, July 6, after the Chinese regulators ordered the company to remove its app from the app store. The development comes just days after the ride-hailing company made a mega IPO debut on the NYSE, in which it raised US$4.4 billion.

The stock was trading at US$12.32, down 20.67% from the previous close, at 1:08 pm ET.

On Monday, the Cyberspace Administration of China (CAC) had ordered DiDi to remove its app from mobile app stores days after it announced a probe into its handling of customer data. It is also probing data security-related issues of other Chinese firms whose parents have listed in the US.

Stocks of those companies also have fallen in Tuesday’s trading. Full Truck Alliance (YMM) fell 18%, and Kanzhun Ltd (BZ) plunged about 12% in intraday trade. The US markets were closed on Monday.

According to The Wall Street Journal on Tuesday, DiDi was warned by Beijing to delay the IPO before the cybersecurity check of its network. But the company had anticipated such a move months ago, which meant the issue is not going to die down quickly, it quoted a source as saying.

Source: Pixabay.

Also Read: DiDi Global NYSE IPO: Here’s all you need to know

Govt measures to impact its revenue

The company said on Monday that the measures could impact its revenue, although the existing customers can continue to use the app.

DiDi shares rose to a high of more than 18% from the offering price of US$14 on the first day of trading on the New York Stock Exchange (NYSE) last Wednesday, June 30. The stock had opened at US$16.65 per piece. At the market close, DiDi was valued at US$68.49 billion, while the IPO fetched US$4.4 billion, one of the biggest by a Chinese company since the Alibaba Group’s US listing in 2014.

DiDi had offered 316.8 million American depositary shares for sale. Its key backers include SoftBank, Uber, Tencent, and Alibaba. Founded in 2012 by the current CEO, Cheng Wei, the company had changed its name a couple of times before settling for Didi.

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