Didi shed a quarter of its market value as its shares tumbled on Tuesday, leading a decline in Chinese companies listed in New York following a clampdown by Beijing’s internet watchdog that rattled investors.
Didi, which uses American depository receipts to trade in the US, dropped as much as 25 per cent in early dealings on the Nasdaq, after the Cyberspace Administration of China announced an investigation into the ride-hailing company on Friday.
Shares hit a low of $ 11.58 after closing on Friday at $ 15.53. The session was the first chance for investors to react to the inquiry because US equities were closed for a public holiday on Monday.
The tumult comes just days after Didi debuted on US markets in the biggest listing so far this year. The company’s shares had surged to a peak of $ 18.01 in their first day of trading last Wednesday, from the initial public offering price of $ 14.
China’s cyber-space administration on Monday ordered Didi to be removed from domestic app stores, saying it had violated laws on the collection and use of personal data. It also announced a cyber-security review into two other Chinese companies that recently listed in the US, and ordered them to freeze user sign-ups during the course of the investigation.
Didi said it “will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users’ privacy and data security, and continue to provide secure and convenient services to its users”. The group added it “expects that the app takedown may have an adverse impact on its revenue in China”.
The intervention follows a move last week by China’s cyber-space administration to ban Didi from signing up new users on its platform. That initial regulatory action sparked a 5 per cent fall in the shares on Friday.
China’s cyber-space administration had recommended in the weeks before the US listing that the company delay the IPO until it had conducted a review of its data security, said a person close to Didi.
The crackdown has cast doubt on a string of planned New York listings by Chinese companies.
Full Truck Alliance, one of the companies being probed by Beijing, dropped 19 per cent. Other Chinese ADRs sustained slimmer falls. Baidu was down 3 per cent, Alibaba slid 2 per cent while JD.com was off 3 per cent.
Reporting by Hudson Lockett and Tabby Kinder in Hong Kong and Sun Yu, Christian Shepherd and Yuan Yang in Beijing.
Author: FT reporters
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