DiDi’s legal problems provide a great, if risky, entry point


DiDijeva (NYSE:DIDI) rapid growth has come to a sharp halt as it is subject to intensive regulatory oversight. She is now one of the worst successful main quotations a Chinese company on the U.S. stock market. Ever since his public debut on New York Stock Exchange On June 30, at $ 14 per share, DIDI shares fell sharply by 66%.

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You can’t tie poor stock performance to Didi’s management or business. Instead of shares it was affected by regulatory repression, as the Chinese government has tried to tighten controls on the security of data and companies listed abroad.

Didi picked it up $ 4.4 billion in the first public offering after selling 317 million US Depositary Shares at IPO price, more than any Chinese company since Alibaba Group (NYSE:GRANDMA).

In early December, just five months after the US IPO, DiDi announced he would file for deletion from the NYSE and continued listing in Hong Kong. It’s a heavy pill to swallow and many investors have opted for redemption, causing DIDI shares to fall 22% on the day.

Shares recently fell to their second-lowest level after Didi’s 180-day blockade expired. Management does not want shares to continue to fall. So it is limiting current and former employees from the sale of shares in hopes of boosting the share price.

Despite the negative external factors, it is difficult to remain enthusiastic about DiDi Global’s growth prospects. As China’s middle class continues to expand, so do opportunities for DiDi Global. So long-term winds are positive. If you are a risk-averse investor, there are several ways to play this stock for short-term and long-term gains.

Regulatory issues Thump Didi Stock

In the last year, Beijing has fallen sharply on Chinese technology stocks. President Xi Jinping’s administration advertises data privacy as a reason to curb the once leisure sector. But several eminent names they feel the burden. For DiDi Global, the sky seemed to be the limit when he debuted on the NYSE. But now things look a little more vague.

DiDi’s board has green highlighted the removal from the NYSE and is pushing for an IPO in Hong Kong. According to the company, DIDI shares will be “convertible into shares of the company, which may be traded on another internationally recognized stock exchange, upon the election of ADS holders.”

Bloomberg reported that the company currently wants to register its IPO in Hong Kong around March, citing people familiar with the matter. According to the report, you could see stock trading on the stock exchange by the summer.

There are three options faced by investors. The first is to sell their shares and wipe their hands with the investment. Another option is to wait for the conversion to the Hong Kong Stock Exchange. You must confirm that your brokerage account provides access to international exchanges if this option meets your investment needs. The third option is to wait and see if the company will opt for private.

Julia, The Wall Street Journal reported DiDi was considering taking the company privately to appease the Chinese government. At the time, DiDi denied the report, but consider the possibility for a moment. If the driving giant was busy, it is likely to be higher than the current stock level.

No matter how you cut it, stocks are traded at a tempting discount for all of these options.

International expansion

Due to the growing middle class in China, big cities are facing a shortage of taxis. Driving offers a solution to this problem and an opportunity to make money for thousands of drivers in all these areas. Didi Chuxing is the most popular transportation service in China with around 90% market share.

Looking ahead, DIDI is focusing on international expansion to become a truly global player in the transportation vehicle industry. He had previously planned their operations in Europe and the UK but he stopped those plans after privacy concerns arose due to local data protection laws.

Much of maintaining high revenue growth rates is expanding into new markets such as Africa. The middle class of the continent is a major catalyst for economic growth in the region. And this will continue to promote urbanization. With a growing number of people living on higher or higher incomes, there are more opportunities for companies like DiDi than ever before.

Overall, according to Precedence Research, the driving sharing market is expected to grow at a total annual rate of 16.7% by 2030, reached $ 344.4 billion.

This growth does not even include the autonomous driving market, which is the largest potential source of money for the company. Removing drivers behind the wheel would allow a company like DiDi to eliminate one of its main cost-consuming profit margins. The end result will be astronomical.

DiDi is investing in the future

DiDi invests huge capital in electric vehicles and autonomous driving technology. With their “robotaxi” unit, which offers rides via mobile robots (think: driverless taxis), they are one of the few companies that have managed not only to provide these services, but also to create them. Didi Chuxing announced this intends to operate more than a million such vehicles by 2030.

It already has 100 autonomous vehicles on the roads. And he hopes to install common electric ones in Chinese cities soon. Didi has a subsidiary for its autonomous driving ventures. With $ 800 million in funding, this startup is now ready SoftBank Vision Fund, among others.

Didi Chuxing is also active in the field of financial services. The product package includes car insurance products, personal loans and massive health coverage. In addition, the transport segment includes food and food delivery. They have a platform to buy a community group called Tuán Gòu. It allows you to buy products in bulk from other members through your app at discounted prices. The driving giant uses its vast treasure trove of user data to figure out what people earn from where they spend most of their time.

Didi competes directly with more established players like Alibaba Ant Financial in Tencent’s (OTCMKTS:TCEHY) WeSure platform. Meanwhile, the Chinese government expand your pressure about fintech beyond Jack Ma’s Ant Group, with Tencent and ByteDance among the newest companies to be called by the authorities.

However, DiDi cannot be blamed for diversifying its revenue base.

Bottom Line on DIDI shares

There is no denying that DIDI shares are deep in the red, as there is a lot of confusion ahead of the planned withdrawal of the company from the US stock market. Nevertheless, there are bright spots that bulls can take advantage of for quick profits.

The company manages the rated 90% share of the driving sharing market in China and continues to grow despite pressure from regulatory agencies. The Chinese giant is also active in several areas with tremendous growth potential.

Therefore, positive winds on the back are more than enough for an investor who is willing to take a little risk and has the option of potential access to stocks abroad. It’s just a voyage through turbulent waters. On the other hand, DIDI shares also make sense as a short-term investment if we consider short-term catalysts.

On the date of publication Faizan Farooque did not hold (directly or indirectly) any positions in the securities referred to in this Article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.

Faizan Farooque is the author of a contribution for InvestorPlace.com and many other financial sites. Faizan has many years of experience in stock market analysis and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions about his portfolio.


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