Didi formally delists from the NYSE, moves to the OTC market
Last Friday, Chinese ride-hailing giant Didi ended its 11-month listing on the New York Stock Exchange.
Didi’s shares, which were previously traded as American depository receipts (ADRs), moved to the over-the-counter market (OTC) in the U.S. on Monday. Its ticker changed from DIDI to DIDIY, and investors who already held Didi ADRs in the U.S. before the move to OTC.
The OTC market refers to the trading of securities outside the major exchanges. Companies that trade on the OTC market don’t have to give out as much information as companies that trade on major exchanges.
OTC Markets Group, which operates an electronic marketplace for broker-dealers to trade OTC stocks, organizes such shares into three tiers. The Pink Market, where Didi will now trade, carries the lowest disclosure requirements.
Investors who already held Didi ADRs in the U.S. before moving to OTC can continue to add or reduce their positions through the pink market.
While listing on the OTC market may deter some institutional investors from investing, that doesn’t mean Didi is deadlocked. Tencent, the Chinese gaming giant, is also traded on the pink market in the U.S.
The delisting is seen as part of the trouble-ridden company’s efforts to gain approval from regulators to restore normal operation of its apps. Days after Didi went public, China’s internet watchdog Cyberspace Administration of China (CAC) launched a cybersecurity probe into the company’s data practices and ordered app stores to remove 25 mobile apps operated by Didi.
In a filing to SEC on May 11, Didi also pointed out that the planned delisting was critical to restoring its services and a possible future listing in Hong Kong. In its latest announcement, however, Didi made no promises about whether or when it would be able to successfully list in Hong Kong.