DiDi Global is drowning in delisting plans and lower revenue

(Bloomberg) — DiDi Global Inc. has fallen. On Monday, after the Chinese carrier giant said it plans to delist its US-traded shares before it finds a new spot for the stock.

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DiDi’s American Depository Receipts fell 18% to $2.01 after it scheduled an extraordinary general meeting on May 23 to vote on delisting its shares from the New York Stock Exchange. While the company will continue to explore listing on another internationally recognized exchange, Didi said it will only apply after the US delisting process is over.

“Although investors were well aware that DiDi Global intended to delist, the method of delisting surprised investors,” said Gary Duggan, chief executive officer at CIO Global.

Separately, DiDi reported that its net loss in the fourth quarter shrank 95% from a year earlier to 383 million yuan despite a 13% decline in revenue to 40.78 billion yuan.

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DiDi’s stock is down 86% since it went public, wiping out $58 billion from its market value. The company was one of the biggest targets under a private sector crackdown in Beijing last year, as regulators launched a cybersecurity investigation just days after its initial public offering and imposed its services on local app stores. It was later said that the agency in charge of data security in Beijing had asked DiDi’s top executives to draw up a plan for delisting due to concerns that sensitive data had been leaked.

In March, the company suspended preparations for its planned listing in Hong Kong after China’s cyberspace administration told executives that their proposals to prevent security and data leaks did not meet requirements, Bloomberg News reported.

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The China Securities and Regulatory Commission said in a statement on Saturday that Didi’s case would not affect talks with the United States over access to the audit. Investors remained optimistic after regulators in Beijing amended a decade-old rule restricting the sharing of financial statements by overseas listed companies. The move could help US regulators gain full access to audit reports of the majority of the more than 200 Chinese companies listed in New York.

The lack of an immediate re-listing plan dealt another blow to DiDi shareholders had they hoped to convert their US-listed holdings into Hong Kong stocks before Didi pulled out of the New York Stock Exchange. It also added to investor nervousness about the company’s path forward, with concerns about further sanctions from regulators.

Jason Hsu, Chief Investment Officer at Rayliant Global Advisors Ltd. “The risk of a stock being written off for an extended period of time before it is listed again is very negative.” ,” He said.

The Nasdaq Golden Dragon China Index fell 2% on Monday, extending its 2.3% decline from last week.

“The Didi news only adds to the bad news from China, and undermines any hopes of a sustained recovery,” Duggan said. “International investors will again delay rebuilding weighting in Chinese stocks.”

(Closing price updates. An earlier version of this story has been corrected to show that the company’s net loss has diminished)

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