Shares of Didi were sent spiralling downwards on Thursday, after reports emerged that Beijing is allegedly planning to impose serious penalties against the ride-hailing company, following its controversial public debut last month.
Regulators from the Cyberspace Administration of China (CAC) were allegedly strongly opposed to Didi’s public offering, given that it posed a threat to Beijing’s authority. Despite this, the ride-hailing app continued with preparations for its NYSE listing, raising over $4.4 billion in its IPO. However, several days later, the CAC abruptly announced it will be conducting a cybersecurity review of the company’s data practices, and then subsequently banned the ride-hailing app from China’s app stores.
Now, according to Bloomberg, which cited people familiar with the matter, Chinese regulators are mulling a number of serious punishments against Didi, including a suspension of certain activities, a mandatory withdrawal or delisting from the NYSE, as well as a fine that is rumoured to be harsher than the record-breaking $2.8 billion penalty against Alibaba Group Holding Ltd.
However, deliberations are still in the infancy stage, and the final outcome of the punishments still remains unknown, said the people familiar with the investigation. Beijing has been ramping up its regulations overlooking Chinese listings in the US, which as of recent have predominantly been tech companies. The country’s State Council has recently announced a series of updates to laws governing “the overseas listing system for domestic enterprises”, which are expected to further stiffen restrictions on security and cross-border data flows.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.