"CHINESE UBER" LOST $ 22 BILLION CAPITALIZATION AFTER THE AUTHORITIES REQUESTED TO REMOVE THE APPLICATION

 

The capitalization of Chinese taxi service Didi fell $ 22 billion after the local regulator demanded that it be removed from app stores. Beijing's claims became known a few days after the company's IPO in New York

The capitalization of the Chinese taxi service Didi fell by $ 22 billion amid restrictions imposed on it by the authorities. Bloomberg reports.

 

The company's securities fell 30% and traded at $ 10.9 per share - significantly less than the value of $ 14 per share, in which the company's securities were priced during the IPO last week, the agency notes. At the time of publication (15:59 Moscow time), Didi shares were worth $ 15.53, losing 5.3% to the price of the previous close.

 

Last week, the Chinese Cyberspace Administration (CAC) launched an investigation into Didi, demanding that it stop registering new users during a check. The regulator said the investigation was necessary to "ensure the security of the data."

 

The CAC later announced that the taxi service should be removed from Chinese app stores. The regulator said the company was illegally collecting personal data from Chinese people. Didi collects large amounts of travel data and uses some of it in autonomous driving technology and traffic analysis, Reuters explained.

 

A spokesman for Didi said the company will remove its app from stores, has already stopped registering new users, and will make changes necessary to comply with the rules and protect user rights.

 

The Didi audit began two days after the company's IPO in New York. In its initial public offering, it raised about $ 4.4 billion, making its IPO the second-largest listing of a Chinese company in the United States. The record belongs to the Alibaba Group, which raised $ 25 billion in 2014.

 

According to sources in The Wall Street Journal, the Beijing authorities were wary of the fact that as a result of listing on the American exchange, data collected by Didi could get to foreigners, and several weeks before the planned listing, they offered the company to postpone the IPO in order to conduct an information security check. ... Didi, in the absence of a direct ban on the IPO, decided not to postpone it, the newspaper wrote.

 

If Didi did know about the upcoming "roundup" of the authorities, "some people may have doubts about the company's management," Vivian Blumenthal, told Reuters. However, in his estimation, the market reacted to the situation “slightly harshly”. “If the restrictions were really being prepared for several months, this means that they will not end in the near future, which explains the significant correction in the share price,” the expert added.

 

Didi acknowledged that removing the app from stores would negatively impact the company's revenue in China, even though it will remain available to existing users, Reuters reported. A service representative told the agency that the company did not know about the investigation prior to the IPO.