Didi Didi Chuxing IPO

Didi closed first day modest after a higher opening

Rebbeca Ren Wang Boyuan

posted on July 1, 2021 4:56 am

Trading under the “DIDI” ticker symbol on the New York Stock Exchange (NYSE), Chinese ride-sharing firm Didi Global had an overwhelming start of $16.65 per share on Wednesday in its introduction to the markets, 30% up from the offer price of $14.

Shares of Didi were changing hands at $14.20 at the market close, giving Didi a market value of about $68 billion.

Didi’s public offering is the largest U.S. listing by a Chinese company since Alibaba’s debut in 2014, which raised $25 billion.

Uber, the once head to head rival of Didi in the Chinese ride hailing market, is another beneficier besides Softbank and Tencent, their current 12% stake owned in the 2016 Uber China merger deal is worth about $8.1 billion as of today.

In comparison, the US ride-sharing giant fell 7.6% in its first day of trading on May 10, 2019, closing at below $42 per share.

On the day before its debut on the secondary market, the Beijing-based company priced shares in its IPO at the top of the indicated range and increased the number of shares sold.

According to the filing, the firm had 493 million annual active users through the trailing 12 months that wrapped up in March, with 15 million annual active drivers and 41 million average daily transactions during that same timeframe.

Didi's CEO Cheng Wei said last year the company aimed to complete 100 million orders a day and have 800 million monthly active users globally by 2022.

For 2020, Didi’s business had been impacted by the pandemic. It brought in 141.7 billion yuan ($21.9 billion) in sales, down 8.5 percent from the past year, and lost 13.7 billion yuan ($2.1 billion). 

Although Didi extremely depends on the domestic market, with more than 93% of its sales coming from China, the company claims to be the world's largest mobile platform, with users in China and 15 other countries, including Brazil, Mexico, and Russia. Internationally, it has to face fierce competitions with players such as Lyft, Grab, GoTo, Ola, and again Uber. Still, a third of the money raising from the IPO will be put to expand its global footprints, as Didi's filing claims.

Nevertheless, the share price of day one still hints the skepticism from the investors as the ride sharing business model stumbles in the wake of the global pandemic. Also, as DiDi addressed in its filing with the SEC, there is regulatory uncertainties in the US and in China.

The company goes public at a time when many of China’s largest tech companies are under increased scrutiny from Chinese regulators, as part of broader antitrust crackdown resulting in fines and mandatory restructuring for many including Tencent and, and the suspension of IPO plans of Ant Group in 2020.