Here’s why DiDi stock is down 23% on Tuesday morning
- China launched a cybersecurity review of DiDi Global Inc.
- New users won't be able to download the ride-hailing app.
- Shares of the company tanked 23% on Tuesday morning.
DiDi Global Inc. (NYSE: DIDI) tanked roughly 25% in the stock market on Tuesday morning as China launched a cybersecurity review of the company. The country’s cyberspace agency also disabled new users from downloading the app.
A brief overview of the stock
Things have been hard for the Chinese vehicle for hire company ever since it went public last week. It had debuted at a per-share price of $14.14, followed by a high of $16.40. Including the price action on Tuesday, the stock is now exchanging hands at $12.16 per share. The blockbuster IPO last week valued DiDi at $68 billion.
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While the announcement came late on Friday, the NYSE listed shares of the ride-hailing firm reacted only this morning as the stock market was closed for the Independence Day celebrations on Monday.
According to The Wall Street Journal, Chinese regulators had already warned DiDi that it should review its network security before listing on the New York Stock Exchange. The recommendation came weeks before the IPO and suggested a delay in going public.
DiDi warned dissatisfied regulators could penalise it
Reuters also reported last month that Chinese regulators were investigating the Beijing-headquartered company for antitrust violations. Its pricing mechanism was also being assessed. In its IPO prospectus, DiDi openly highlighted that if regulators were left unsatisfied, it could face a penalty in the future.
After years of leniency, China is tightening its regulations for the tech giants. Apart from DiDi, Beijing is also conducting a cybersecurity review of other U.S. listed Chinese companies, Boss Zhipin being the latest one.
The ride-hailing company now operated in fourteen countries other than China and boasts 41 million average transactions per day from 493 million annual active riders. DiDi is also active in developing self-driving technology to turn autonomous taxis from a concept to reality.