DiDi Global Inc. (DIDI) stock prices were down by 5.30% as of the market closing on July 2nd, 2021, bringing the price per share down to USD$15.53 at the end of the trading day. Premarket fluctuations saw the stock plummet by 22.22%, bringing it down to USD$12.08.
Troubles in China
July 6th, 2021 saw the company announce the removal of its DiDiChuxing mobile app in China in accordance with directions from the Cyberspace Administration of China (CAC). The order came following the CAC’s belief that the company was collecting the personal information of its users, which is in direct violation of Chinese laws and regulations. Global operations are expected to be directly unaffected. With the app having been taken down in the massive Chinese market, the company expected its Chinese revenues to suffer. Fortunately, users who had downloaded the app before the CAC’s directives can continue making use of it.
Increasing Regulations
The Chinese version of Uber, the ride hailing service, is facing a harder time pitching its shares to prospective investors as China’s regulations are ramped up. Global equity managers are considering the impact of the increasing regulatory threats as the country’s efforts to control big data develop. The move sees China target companies that are spreading into the North American markets with the launches of U.S IPOs by Chinese tech companies.
Scope of Chinese Tech Space
The Chinese capital continues to crack down on the tech space, with as many as 34 pending filings for U.S. listings by Chinese and Hong Kong based companies having been announced this year. These numbers are unprecedented, with more than USD$15 billion priced in New York IPOs in the year so far. Following the cybersecurity review of DIDI, the company saw its shares drop massively in the U.S premarket.
Ripple Effect
Chinese companies that are subject to increasing regulations are unhappy with the way the regulations are being enforced. Rather than preventing the U.S IPOs from commencing, China has forced companies to break trust with many foreign investors. Even after the resolution of the matter at hand, it will take significant effort to repair the adverse effect on the company’s brand image.
Future Outlook for DIDI
With the planned IPO having been pulled, DIDI is exploring measures to recoup from the financial and non-financial adverse effects of recent Chinese developments. Current and potential investors are hopeful that the Chinese government will facilitate the accessible expansion of the tech space with a reigning in of regulations.
