Didi’s exit from the NYSE came after a new decision by the US Securities and Exchange Commission that may affect certain foreign companies.
Six months after its IPO on the New York Stock Exchange, Chinese ride-hailing giant Didi (NYSE: DIDI) has revealed plans to delist from the exchange. Didi made its market debut on the NYSE on June 30th at $14 per share.
The public offering triggered some reaction from Chinese regulators who had requested that Didi put a hold on its US IPO. Didi eventually launched its IPO at $4.4 billion in the United States. This decision to go ahead with the IPO made the Cyberspace Administration of China (CAC) order Didi’s removal from China app stores. Didi was also ordered to stop registering new users as they now pose a national security risk and break privacy laws.
China’s crackdown on Didi brought its shares down a total of 44% since its US IPO. The stock closed at a selling price of $7.80 and is currently at a premarket price of $8.51.
Didi to Delist from NYSE
Didi’s exit from the NYSE came after a new decision by the US Securities and Exchange Commission (SEC) that may affect certain foreign companies. Foreign companies listed in the US will have to delist if they disallow auditing by the regulators. As such, Didi, which has not allowed US regulators to audit its accounts, will have to delist from the NYSE.
Didi mentioned its delist plans on Weibo. Writing on the Chinese Twitter-like platform, the cab-hailing company said:
“Following careful research, the company will start delisting on the New York Stock exchange immediately and start preparations for listing in Hong Kong.”
The company said it is making this decision with the backing of its board of directors. The board has granted permission for Didi to list its shares on the Hong Kong stock exchange market (HKEX). Also, It would make sure its New York shares are convertible to “freely tradable shares on another internationally recognized stock exchange.”
The delisting of Didi after Beijing clamped down on them came as an incredible shock through Chinese social media. The clampdown on Didi was China’s way of making an example of them to other big tech companies. Afterward, Chinese authorities proposed that companies with access to information on more than a million users seek approval before pursuing an IPO overseas.
Softbank’s Stock Declines as Didi Plunges
Softbank is Didi’s largest shareholder. The delisting of Didi affected the share of Softbank who has over 30% stake in the company. As of the time of writing, Softbank stock is down at about 0.71%.
Didi has been recording steady declines since its IPO, including more than a 13% loss in the last three months. Also, the company has shed 3.94% over the past month and over 1% in the last five days.
Aaron Costello, regional head of Asia at Cambridge Associates, has this to say:
“I think China has made it clear they no longer want technology companies listing in US markets, because it brings them under the jurisdiction of US regulators.”
He added that most US-listed tech companies will eventually relist “either Hong Kong or the mainland.”
Didi would not be the first on the receiving end of China’s regulator’s ire. E-commerce companies like Alibaba (NYSE: BABA), retail company JD.com (NASDAQ: JD), and tech company Baidu (NASDAQ: BIDU) were also affected.
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