Didi is a Chinese vehicle for hire company. Its services have millions of users and hundreds of millions of drivers. The company is worth billions of dollars and has a high growth rate. In fact, the company is expected to double in size this year. Didi stock is up over 54% this year, and it’s worth a look.
Despite its recent growth, the company faces a lot of challenges, however. The biggest is that the company has squandered its leadership position in the world’s largest ride-hailing market. Between June of last year and March this year, the number of ride-hailing orders declined 29 per cent. By comparison, smaller rivals saw their orders rise.
While there are a lot of concerns surrounding Didi, investors should consider the company’s IPO prospects before making a decision. As of now, the company’s stock is trading under less than half of its book value. This is a big sign that the company’s IPO plans may have failed. As a result, the company is expected to hold a shareholder vote on delisting plans on May 23.
Despite the difficulties facing DiDi, its growth prospects are significantly better than those of Uber. As long as China’s regulators do not interfere with DiDi’s operations, the stock could increase in value. But investors should wait until the company has fully reloaded its app. There’s also a chance that it might try to take itself private with a lowball offer. Until then, the risks outweigh the rewards.
China’s tech crackdown has spread to the ride-hailing industry. Didi was banned from Chinese app stores and delisted from the NYSE last week, and China’s cyberspace regulator is conducting an investigation into its data practices. Moreover, it has stopped registering new users. The company also faces the threat of being delisted from the U.S.
The stock is currently at a record low, and its chances of recovering soon are slim. If shareholders are not willing to lose their investment, they have the option of voting on the delisting. If shareholders decide to delist the company from the NYSE, the company faces further regulatory scrutiny in China. Alternatively, they can vote to return to normal operations.
Didi’s struggles with the board migration may be an anomaly, but the company may soon face similar problems for the 261 Chinese companies that are listed on the NYSE. These problems are a result of new U.S. laws that require foreign companies to share their working documents. Didi’s IPO could also face trouble from the SEC.
