DiDi Global Inc. tumbled Monday, after the Chinese ride-hailing giant said it's planning to delist its U.S.-traded shares before it finds a new venue for the stock. The company also reported that its quarterly loss almost doubled.
DiDi's American depository receipts sank as much as 23% to $1.90 after it set an extraordinary general meeting for May 23 to vote on delisting its shares from the New York Stock Exchange. While the company will continue to explore listing on another internationally recognized exchange, DiDi said it won't apply until after the U.S. delisting is finished.
"Although investors were well aware that DiDi Global intended to delist, the manner of delisting has taken investors aback," said Gary Dugan, CEO at Global CIO Office, an outsourced CIO firm.
Separately, DiDi reported that its fourth-quarter net loss widened by 95% from a year earlier to 383 million yuan ($60.2 million) on a 13% decline in revenue to 40.8 billion yuan.
DiDi has plunged more than 86% since going public, wiping out $58 billion in market value. The company has been one of the biggest targets under Beijing's private-sector crackdown last year, as regulators launched a cybersecurity probe just days after its initial public offering and forced its services off domestic app stores. The agency in Beijing responsible for data security was later said to have asked DiDi's top executives to devise a plan to delist because of concern sensitive data might leak.
In March, the company suspended preparations for its planned Hong Kong listing after the Cyberspace Administration of China informed executives that their proposals to prevent security and data leaks had fallen short of requirements, Bloomberg News reported.
The Chinese Securities and Regulatory Commission said in an April 16 statement that Didi's case would not affect talks with the U.S. on audit access. Investors had remained optimistic after Beijing regulators modified a decadelong rule that restricted financial data sharing by offshore-listed companies. The move could help U.S. regulators gain full access to auditing reports of the majority of the 200-plus Chinese companies listed in New York.
The lack of an immediate relisting plan dealt DiDi shareholders another blow had they hoped to convert their American depository receipts to Hong Kong shares ahead of Didi's NYSE withdrawal. It also added to investor jitters on the company's path forward, with concerns surrounding further penalties from regulators.
"The risk that the stock will be delisted for an extended period of time before being listing again is very negative," said Jason Hsu, CIO of Rayliant Global Advisors. "The assumed liquidity premium is clearly being reflected in the price now," Mr. Hsu said.
The Nasdaq Golden Dragon China index dropped as much as 4.4%, extending a 2.3% decline from last week.
"The DiDi news only adds to poor news from China, undermining any hopes for a sustained rally," Mr. Dugan said. "International investors will once again be put off rebuilding weighting in Chinese equities."
