Didi jumps 49% in premarket trading on report it could delist
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Shares in Didi Chuxing jumped by almost half in pre-market trading on Thursday following a report that the embattled ride-hailing app was considering going private just weeks after its $4.4bn US stock market launch drew the wrath of Chinese regulators.
The company quickly released a statement denying “rumours” that it could delist, leaving shares a more modest 12 per cent higher on the day.
Didi has come under intense regulatory pressure since it listed on the New York Stock Exchange at the end of June, despite private warnings in advance by Chinese regulators to delay the share sale.
The Cybersecurity Administration of China announced an investigation into Didi almost immediately after its IPO, with top leaders in Beijing calling for a complete overhaul of regulations for foreign listings. That sent the company’s newly listed shares down almost 50 per cent in recent weeks, with multiple law firms filing class action lawsuits against the company on behalf of shareholders.
The CAC has also proposed new rules banning companies with more than 1m users from listing abroad without passing a security review and receiving official permission, one in a raft of strict new regulatory measures that have sent Chinese tech stocks tumbling in recent weeks.
But Didi’s shares rose as much as 49 per cent in pre-market trading on Thursday after The Wall Street Journal reported that the company was considering going private to appease Chinese regulators and compensate investors for the post-listing losses.
The report cited unnamed sources saying a take-private offer could potentially be funded with money raised from the US launch.
The company said in a statement posted on Chinese social media that “rumours of Didi’s privatisation are untrue”, adding it was “actively co-operating” with the cyber security probe.
Going private could address some of the issues facing Didi but the company remains under investigation, with multiple government departments stationing investigators inside the company’s offices to conduct the security probe.
Lawyers have warned that the investigation is unlikely to come to a swift conclusion.