Didi stock becomes an option on China tech

A driver of Chinese ride-hailing service Didi drives with a phone showing a navigation map on Didi’s app, in Beijing, China July 5, 2021. REUTERS/Tingshu Wang – RC24EO9UW3RM

HONG KONG, May 24 (Reuters Breakingviews) – Brave investors might salvage value from Didi Global’s wreckage. Shareholders voted to delist China’s ride-hailing firm from the New York Stock Exchange, capping a disastrous 11-month journey that wiped 90% off Didi’s valuation since its initial public offering.

Didi’s fate now lies with China’s cybersecurity regulator, which is investigating the company over data practices. App stores have taken down Didi’s services while existing offerings are banned from registering new users. The company stressed that if it stayed in New York, it would not be able to complete the cybersecurity review.

The optimistic scenario is that regulators will allow Didi to resume operations and relist in Hong Kong. At the current $7 billion market capitalisation, Didi is trading at less than half its book value.

The risks are huge, though. Didi faces potentially damaging penalties. It might not clear Hong Kong’s tough listing requirements, which were one reason the company opted for New York in the first place. New regulations also raise fresh concerns about Didi’s growth. This white-knuckled investment ride is not for everyone. (By Robyn Mak)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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