DiDi Global: An IPO that Failed in All Ways

DiDi Global Inc. (NYSE:DIDI) “the world’s leading mobility technology platform” has faced a tough time over the past 3-month period with losses of nearly 50%. In 2022, DIDI stock is down 15.9%. Is now the time to buy this beaten-down penny stock as China is among the top global economies and may surpass…

the U.S. economy in terms of gross domestic product (GDP) in a few years? Do not rush into it without reading the latest news about DiDi Global.

Back in Sep. 2021, my article on DiDi Global had a dramatic title: “DiDi Global Is Driving on ‘Death Road’ With Your Money.” I listed arguments, including government probes, delisting rumors, and bad financials as negative factors for DIDI stock. I concluded “Given the recent news and its poor key financials, I wouldn’t go near it.”

A quick reminder of Didi Global’s initial public offering (IPO) will demonstrate what I often call irrational exuberance in Wall Street.

Losing Value, Tons of It

Shares of DiDi Global made their trading debut in the summer of 2021 on the U.S. stock market. It was valued at $62 billion in the private markets. On the first day of trading, DIDI stock gained 1%, closing at $14.14 with a market cap of nearly $67.8 billion. The IPO offering price was $14 a share.

At some point during the first trading session, the stock made a high of $18.01, up about 28% from the company’s offering price of $14 per share. This brought its market cap to more than $80 billion.

Now there is too much pain and even regret for early investors of DiDi Global. The current stock price is $4.17 and the market capitalization is $20.28 billion. This is about 70% off its IPO price. Nevertheless, even more negative news is present now.

A Delisting from New York Stock Exchange Is Coming Soon

The listing on the New York Stock Exchange will not last long as the firm has announced its decision to “[delist] the Company’s ADSs from the New York Stock Exchange, while ensuring that ADSs will be convertible into freely tradable shares of the Company on another internationally recognized stock exchange at the election of ADS holders.”

The company has chosen to list on the Hong Kong Stock Exchange. What this means is that U.S. retail investors will have the choice to keep their shares of DiDi as they will convert to other tradable shares on the Hong Kong Stock Exchange. But this adds a lot of risks, uncertainty, and practical issues.

First, it could take a considerable amount of time to complete the listing to the Hong Kong Stock Exchange. Second, it will be a challenge for investors to monitor their shares on another stock exchange in a different currency as they will have to monitor both the stock price and the…

 

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