DiDi is leaving the New York Stock Exchange less than six months after its IPO. The ride-hailing company plans to relist its shares in Hong Kong. This shift could cause big headaches for U.S. investors.
Full Answer
Should you buy Didi stock?
The stock looks reasonable at the current earnings multiple, and the new dividend provides a 3.8% yield at the current share price of $126. The gains investors enjoyed in the past year won’t likely be repeated in 2022, but Royal Bank remains a top stock to pick as a long-term anchor position for a TFSA or RRSP portfolio.
Is Didi global stock a buy?
DiDi Global Inc. (NYSE:DIDI) shares ... The stock is rated as a Hold by 1 analyst(s), 0 recommend it as a Buy and 0 called the DIDI stock Overweight. In the meantime, 0 analyst(s) believe the stock as Underweight and 0 think it is a Sell.
When is Didi delisting?
Didi stock fell more than 8% on Wednesday after the Chinese ride-hailing platform reported a third-quarter net loss of RMB 30.4 billion ($4.7 billion), compared with a net income of RMB 665 million during the same quarter last year. Revenue decreased ...
How did Didi get in trouble with data regulators?
In early July, the Chinese government initiated cybersecurity reviews of Didi and a number of other China-based companies. Consequently, DiDi was restricted from registering new users. Reportedly, Chinese regulators prohibited new downloads of Didi’s app.
Is Didi stock going to be delisted?
DiDi Global is going forward with its plan to delist from the New York Stock Exchange after investors overwhelming approved the plan Monday, the Chinese ride-hailing giant said.
What happens if Didi stock is delisted?
If the firm delists, its shares will be relegated to the US "over-the-counter" (OTC) market, a mostly unregulated platform with far less liquidity than the NYSE. Banishment to the OTC would render Didi uninvestable to many institutional investors.
Why are Didi shares down?
DiDi Global DIDI +8.65% shares sank Monday after the Chinese ride-hailing company said it was preparing to delist from the New York Stock Exchange, and reported a fourth-quarter revenue decline of 12.7%. U.S.-listed shares of DiDi (ticker: DIDI) fell 22% to $1.92. The stock has fallen more than 61% year to date.
Will Didi stock recover?
A lot of tech companies went public in 2021, and many if not most of them are trading below their IPO prices. That's OK—markets rise and fall, and with any luck, the shares will recover eventually. But if you're a shareholder in one such company, Chinese ride-hailing firm Didi Global, you may be out of luck.
What happens to my shares if a stock is delisted?
If a company has been delisted, it is no longer trading on a major exchange, but the stockholders are not stripped of their status as owners. The stock still exists, and they still own the shares; however, delisting often results in a significant or total devaluing of a company's share value.
What happens to Didi US shareholders?
In December, Didi said it planned to delist its shares in the U.S. and pursue a listing in Hong Kong. The company has since said it must resolve the cybersecurity review before it can apply for its apps to be restored in China and register new users again.
Why did Didi get delisted?
Why is Didi going to delist? Chinese regulators opposed the US listing, saying it could expose Didi's vast troves of data to foreign powers. The firm pressed ahead with the June 2021 IPO anyway, in a move that Beijing saw as a challenge to its authority.
What happens to shareholders after delisting?
If a company is delisted, you are still a shareholder, to the extent of a number of shares held. And yet, you cannot sell those shares on any exchange. However, you can sell it on the over-the-counter market. This means you can look for a buyer outside the stock exchange.
NYSE: DIDI
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China's ride-hailing leader is headed back home
DiDi Global ( DIDI -5.40% ), the largest ride-hailing company in China, plans to delist its shares from the New York Stock Exchange and pursue a new listing in Hong Kong. The announcement, which comes less than six months after DiDi's initial public offering (IPO), shouldn't surprise investors.
1. Going private at a discount to its IPO price
Over the past few years, many Chinese companies that initially went public in the U.S. took themselves private before going public again on Chinese exchanges at much higher valuations. The deals couldn't be blocked because the management controlled most of the votes, and U.S. investors were often forced to sell their shares at steep discounts.
2. Retreating to an OTC exchange
A less painful option would be for DiDi to relist its shares on an over-the-counter ( OTC) exchange. That's what Luckin Coffee ( LKNC.Y 0.00% ) did after it was delisted from the Nasdaq last June. Luckin's stock had dropped below $2 per share at the time after its fabricated sales figures were exposed, but it now trades at about $13.
3. Swapping ADR shares for HK shares
In its press release, DiDi claims its ADR shares "will be convertible into freely tradable shares" in Hong Kong after it relists the stock.
Should investors still hold their shares of DiDi?
DiDi's investors might be reluctant to sell their shares at their current reduced prices, since the stock now trades at less than its estimated revenue this year. However, the stock should remain cheap for a very long time.
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China wants Didi to delist over security concerns
China is concerned about the security of its citizens’ data. Not only is Didi listed in the U.S., but two of its biggest stockholders, Uber and SoftBank, are non-Chinese companies.
It's unclear what would happen to your Didi stock
Bloomberg first reported that China wants Didi to either list on Hong Kong, which is now fully part of China, or go private. If the company lists in Hong Kong, U.S. Didi investors would get its Hong Kong-listed shares. However, the Hong Kong listing may be at a lower price than its current U.S. price.
SoftBank could lose billions from the Didi fiasco
SoftBank, which is Didi's largest stockholder, would be the biggest loser in a delisting. So would Uber, which got a stake in Didi in exchange for selling its Chinese operations to the company. Uber has been facing tough competition outside the U.S. and has exited several other markets in Asia.
Other Chinese stocks might also fall
Chinese stocks tumbled amid the tech crackdown. Furthermore, just when fears of further Chinese crackdowns were abating, concerns of a slowdown in the world’s second-largest economy grew, exacerbated by Alibaba's tepid outlook during its Q2 2022 earnings release.
Xi Jinping might not care much
For Chinese president Xi Jinping, social stability and national security are a far bigger concern than Didi stockholders losing billions of dollars. The country has taken a hard turn toward the left, erasing the gains it has made over the last two decades. Didi’s delisting would also impact other Chinese companies seeking a U.S. listing.
A Closer Look at DIDI Stock
Just to provide a quick recap, DIDI stock started off amid high hopes and multi-bagger dreams. The IPO took place on June 30, 2021, and the stock began trading at $16.65 per share.
More Turbulence
The “good” news, if there is any to be found here, is that that American depositary shares (ADSs) “will be convertible into freely tradable shares of the Company on another internationally recognized stock exchange at the election of ADS holders.”
It Only Gets Worse
Evidently, the company’s current and former employees are restricted from selling their DiDi shares for an indefinite amount of time.
The Bottom Line on DIDI Stock
Admitting defeat in an investment isn’t necessarily easy. Yet, it’s important for informed traders to let go of toxic, low-conviction assets.