Chinese tech crackdown pushes Didi Global and its affiliates to sell off Reuters

Authors: Scott Murdoch and Thyagaraju Adinarayan

Hong Kong/London (Reuters)-Didi Global’s share price fell as much as 25% in US morning trading on Tuesday, a few days after Chinese regulators ordered the company’s app to be listed on the New York Stock Exchange for $4.4 billion The first trading day since the shelf.

On Sunday, the China Cyberspace Administration of China ordered the app for the ride-hailing giant to be removed from the China Mobile App Store. The bureau said it was investigating Didi’s processing of customer data.

CAC also announced on Monday that it will conduct cybersecurity investigations on other Chinese companies whose parent companies are listed in the United States. The share prices of these parent companies have also fallen.

Full Truck Alliance fell about 20% and Kanzhun Ltd fell about 8%.

The US market is closed on Monday due to the July 4 holiday.

The last trading price of Didi’s global share price was approximately US$12, which was much lower than its initial offering price of US$16.65 on June 30-a market value of approximately US$19 billion.

The Wall Street Journal reported on Tuesday, citing sources, that regulators have warned the company to postpone its initial public offering (IPO) and check its cyber security.

“Sources said that Didi knew a few months in advance that the crackdown was coming, and some people would start to have doubts about the company’s governance,” said Sumeet Singh, head of research at Aequitas, who published an article on Smartkarma. “If the crackdown is indeed planned months in advance, it will mean that it will not disappear anytime soon.”

Didi said on Monday that the ban on the app will harm its revenue in China, although existing users can still use it. It also told Reuters that it had no knowledge of the investigation before the initial public offering.

“Didi’s app ban will hurt its user growth. At the same time, due to concerns about leaking their personal data, existing users of Didi apps will also have a certain degree of reservations about using the company’s apps,” Shifara Samsudeen said. An analyst at LightStream Research, he also wrote an article on Smartkarma. “So it is clear that Didi’s revenue will be affected.”

Didi shares were sold at a price of $14 per share in the IPO, which is the largest since a Chinese company went public in the United States. Alibaba (NYSE:) Raised $25 billion in 2014. As of Friday, the company’s valuation was as high as 75 billion U.S. dollars.

CAC stated that after discovering that Didi had illegally collected personal data from users, it had ordered the app store to stop providing Didi apps.

Dave Wang, portfolio manager of Singapore’s Nuvest Capital, said: “Some investors may have been pleased that the continued listing was carried out with the support of the authorities, and now we know that it is clearly not.”

Nuvest did not participate in Didi’s IPO.