Didi shares plummet 18.29% as the delisting plan is on the table

April 18, 2022 0 Comments

Chinese ride-hail giant Didi said that it plans to delist its shares in the US before applying to list on an alternate exchange.

The trouble-ridden company also announced fourth-quarter earnings, with revenue down 12.7% year-on-year to $6.4 billion. The decline was mainly caused by a 15.1% drop in revenue from its core ride-hailing business in domestic market.

The company reported a net loss equivalent to $27 million for the fourth quarter.

An extraordinary general meeting will be held on May 23 to vote on the NYSE delisting, Didi said in a statement on Saturday, adding that it won’t apply to selling shares on any other stock exchange before finishing the move in the US. According to the statement, it would continue to explore a potential listing on another internationally recognized exchange.

Didi has been closely watched by Chinese authorities since it went public in the US in mid-2021. Shortly after its IPO, the cybersecurity regulator launched a probe into the firm and forced it to remove its apps from domestic app stores. The agency in Beijing responsible for data security was later said to have asked DiDi’s top executives to devise a plan to delist because of concern sensitive data may leak.

Last December, Didi is reportedly seeking ‘listing by introduction’ on Hong Kong Stock Exchange. Unlike typical IPOs, companies listing stock by introduction in Hong Kong raise no capital and issue no new shares. In Didi’s case, the mechanism will allow it to list shares in Hong Kong without raising capital or issuing new stock as it seeks to delist from New York.

However, the plan did not go as expected. On March 11, Reuters reported that the ride-hailing giant had suspended preparations for “listing by introduction” due to its failure to meet China’s conditions on handling sensitive user data.

In response to Didi’s latest delisting announcement, China’s securities regulator said Saturday that Didi’s decision to withdraw from the US market was an independent one made by the company that has nothing to do with other US-listed Chinese stocks. The China Securities Regulatory Commission also said Didi’s decision isn’t related to ongoing discussions between the two countries about auditing requirements.

Didi shares plunged 18.29% on Monday to close at $2.01 on the news, down more than 80% from its IPO price of $14. Citing people familiar with the matter, Chinese tech news outlet LatePost reported in February that Didi is laying off 20% of its workforce, or about 3,000 people.

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