Didi Shares Plummet As China Mulls Hefty Fines, Possible Delisting

Didi, china, NYSE, regulators

Ride-hailing giant Didi could face hefty fines from Chinese regulators as well as possible delisting from the New York Stock Exchange (NYSE), CNBC reported on Thursday (July 21), citing sources.

Didi shares dropped over 8 percent and its month-to-date losses totaled more than 25 percent. Fines from Chinese regulators could exceed the historic $2.8 billion penalties levied against Alibaba this year. Didi’s punishment could also force the company to delist or withdraw its U.S. shares, according to the sources. 

Since Didi went public on June 30, shares dropped 25 percent to $10.50 per share from its trading debut at $14 a share. Regulators forced the removal of Didi’s app from WeChat and Alipay and app stores.

Beijing recently ramped up efforts to oversee Chinese companies going public in the U.S. The State Council recently said that mandates for foreign listings will be revised and will include further restrictions on how data is shared cross-border. 

“It’s hard to guess what the penalty will be, but I’m sure it will be substantial,” Claremont McKenna College government professor Minxin Pei told Bloomberg.

Chinese regulators from seven different agencies descended on Didi’s headquarters last week to conduct an on-site cybersecurity review. Officials had already forced the deletion of Didi’s apps and the company was instructed not to sign any new users. The Cyberspace Administration of China said that Didi was illegally collecting data from its user base.

Regulators investigating Didi include the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport and the Ministry of Natural Resources.

PYMNTS analysis of Didi’s SEC F-1 from its IPO outlined the revenue opportunity in the $6.7 trillion mobility market, which is expected to grow to $16.4 trillion by 2040. Didi executives indicated in the filing that “the new mobility paradigm is expected to significantly increase the already massive mobility market opportunity.”