DiDi Global Inc. fell on Monday, after the Chinese ride-hailing giant said it planned to delist its U.S.-traded shares before finding a new venue for the action. The company also reported that its quarterly loss nearly doubled.
DiDi’s U.S. certificates of deposit fell 23% to $1.90 after it set a special general meeting for May 23 to vote on delisting its shares from the New York Stock Exchange. While the company will continue to explore listing on another internationally recognized stock exchange, DiDi said it would only apply after the US delisting ends.
“Although investors were well aware that DiDi Global intended to delist, the manner in which it proceeded surprised investors,” said Gary Dugan, CEO of Global CIO Office, an outsourced CIO firm.
Separately, DiDi said its fourth-quarter net loss rose 95% from a year earlier to 383 million yuan ($60.2 million) on a 13% decline in revenue to 40 .8 billion yuan.
DiDi has plunged more than 86% since its IPO, wiping out $58 billion in market value. The company was a major target of a private sector crackdown in Beijing last year, as regulators launched a cybersecurity probe just days after its IPO and forced its services out of business. national app stores. Beijing’s data security agency reportedly later asked DiDi’s senior executives to draw up a delisting plan due to concerns that sensitive data could leak.
In March, the company suspended preparations for its planned Hong Kong listing after China’s Cyberspace Administration informed executives that their proposals to prevent security and data leaks had failed to meet requirements, reported Bloomberg News.
China’s Securities and Regulatory Commission said in an April 16 statement that Didi’s case would not affect talks with the United States over audit access. Investors remained optimistic after regulators in Beijing changed a decade-old rule that restricted the sharing of financial data by overseas-listed companies. The move could help US regulators gain full access to audit reports from the majority of the more than 200 Chinese companies listed in New York.
The lack of an immediate re-listing plan dealt another blow to DiDi shareholders if they had hoped to convert their US certificates of deposit into Hong Kong stock before Didi’s delisting from the NYSE. It has also added to investor nervousness over the company’s path forward, with concerns over further sanctions from regulators.
“The risk of the stock being delisted for an extended period before being listed again is very negative,” said Jason Hsu, CIO of Rayliant Global Advisors. “The supposed liquidity premium is clearly reflected in the price now,” Hsu said.
The Nasdaq Golden Dragon China Index fell 4.4%, extending a 2.3% decline from a week ago.
“The news from DiDi only adds to the bad news out of China, undermining any hope of a sustained rally,” Dugan said. “International investors will once again be deterred from rebuilding their weighting in Chinese equities.”