Didi Chuxing Technology Co., formerly Didi Dache and Didi Kuaidi, is a Chinese vehicle-hire company with over 550 million users and tens of millions of drivers. The company was founded in 2010 and has grown exponentially in recent years. It is now a multi-billion-dollar company with a staggering user base and a stellar growth trajectory.
Compared to rival Uber, DiDi shares are less expensive and carry less risk. The stock is currently trading at 0.4 times this year’s sales. But the company still has some risks that could deter potential buyers. The company faces a battle with Chinese regulators, who do not want U.S. investors owning shares of Chinese technology companies.
Didi is the world’s largest ride-hailing company, but it also offers bus services, chauffeur services, delivery services, and car rentals. Investors can trade Didi shares by taking a position on the stock price. This means buying if you think it will increase, and selling if you think it will decline.
Among the factors affecting Didi’s value is the fact that the company was listed on both New York and Hong Kong stock exchanges in the past. The delisting will require a simple majority vote from its shareholders. Although this is a significant hurdle for the company, if it is successful, it could become untouchable for some investment houses.
Another key risk is that Didi’s stock will trade on the over-the-counter market until Beijing approves its IPO. However, the company’s dominance in China will present a golden opportunity to boost its prices and reach profitability. Therefore, investors should be very cautious with Didi shares until they are approved by the authorities.
Beijing’s tech crackdown has shifted its focus to ride-hailing. Although there’s no definitive proof of a breach, China’s cyberspace agency is investigating Didi over concerns regarding privacy and national security. In addition, Didi’s main app was temporarily blocked in the Chinese app stores.
Didi’s board migration problems are likely to be an anomaly and not a harbinger of what will happen to all of the other 261 Chinese companies listed in the United States. However, they are a symptom of a larger problem that could affect all the companies listed in the U.S.
Another risk is that Didi will face regulatory scrutiny in the United States. This means that it will face significant legal issues if it chooses to list on the NYSE. The company has warned investors that its IPO may fail because of the regulators. However, it did go ahead with its IPO anyway.
Regulatory problems have affected its global growth and are likely to continue for some time. However, the Chinese government is reviewing Didi’s cybersecurity, and it’s expected to be back in mainland China’s app stores this week. If the company successfully returns to the mainland Chinese app stores, its share price will likely increase further.