(Bloomberg) – DiDi Global Inc. plummeted on Monday after the Chinese ride-hailing giant said it plans to delist its U.S.-traded shares before finding a new trading venue for the stock.
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DiDi’s American depositary receipts fell 18% to $2.01 after DiDi scheduled an extraordinary shareholders’ meeting for May 23 to vote on delisting its shares from the New York Stock Exchange. While the company will continue to consider listing on another internationally recognized exchange, DiDi said that will only be the case once the US delisting is complete.
“Although investors were aware that DiDi Global intended to delist the company, the manner of the delisting has surprised investors,” said Gary Dugan, Chief Executive Officer of the Global CIO Office.
Separately, DiDi reported that fourth-quarter net loss narrowed 95% year on year to 383 million yuan, despite a 13% drop in revenue to 40.78 billion yuan.
DiDi’s move from NYSE to Hong Kong – Trivia: QuickTake
DiDi has plunged 86% since its IPO, wiping out $58 billion in market value. The company was one of the biggest targets of the private-sector crackdown in Beijing last year, when regulators launched a cybersecurity probe and banned its services from domestic app stores just days after its IPO. Beijing’s data security agency later reportedly asked DiDi’s top executives to come up with a plan to delist it amid concerns that sensitive data could be leaked.
In March, the company suspended preparations for its proposed Hong Kong listing after the Cyberspace Administration of China informed executives that its proposals to prevent security and data leaks fell short of requirements, Bloomberg News reported.
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China’s securities and regulators body said in a statement on Saturday that Didi’s case would not affect talks with the US over access to audits. Investors had remained optimistic after the Beijing regulator changed a decades-old rule restricting the sharing of financial data by offshore listed companies. The move could help US regulators gain full access to audit reports from the majority of over 200 Chinese companies listed in New York.
The lack of an immediate relisting plan dealt another blow to DiDi shareholders who had hoped to convert their US-listed holdings into Hong Kong shares ahead of Didi’s withdrawal from the NYSE. It also added to investors’ nervousness about the company’s future path amid concerns about further penalties from regulators.
“The risk of the stock being delisted for an extended period of time before being listed again is very negative,” said Jason Hsu, chief investment officer of Rayliant Global Advisors Ltd. “The assumed liquidity premium is now clearly reflected in the price,” he said.
The Nasdaq Golden Dragon China Index fell 2% on Monday, continuing a 2.3% decline from last week.
“The DiDi news only adds to the bad news out of China and undermines any hopes for a sustained recovery,” Dugan said. “International investors are once again discouraged from rebuilding exposure to Chinese equities.”
(Updates with closing prices. A previous version of this story has been corrected to narrow the company’s net loss)
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