- DiDi Global (NYSE:DIDI) will proceed with plans to delist from the New York Stock Exchange (NYSE)
- Recently, 96% of shareholders voted in favor of the motion
- This delisting news is pushing DIDI stock up this morning
DiDi Global (NYSE:DIDI) is delisting from the New York Stock Exchange. Earlier today, the Chinese ride-hailing company put the motion to a vote at its shareholder meeting; 96% of shareholders voted in favor of delisting, including CEO Will Wei Cheng and President Jean Liu. For all the turbulence DIDI stock has seen this year, shares are now reacting well to the news.
DIDI stock shot up within the first hour of trading today. Despite some growth in late April, shares plunged earlier this month on news of a probe from the U.S. Securities & Exchange Commission (SEC). Losing more than 25% of its value, DIDI had failed to regain momentum since then. Now, though, the stock is rising more than 2%.
Let’s take a closer look at the big picture for DIDI stock.
What’s Happening with DIDI Stock?
The 96% majority vote in favor of delisting is high, but not unexpected. DiDi has spent the past year fighting an uphill battle it never had a chance of winning. Shares have plunged more than 80% over the last six months. While China’s tech crackdown first sent DIDI into a tailspin, the recent SEC probe is what made things significantly worse. As the Wall Street Journal reports, the company needed to delist from the NYSE before it can resolve any of the cybersecurity issues that inspired the probe.
So, what happens once it delists? Shares will likely be made available via the over-the-counter (OTC) market. OTC is mostly home to smaller-cap names and, while it does promise less scrutiny for DiDi, it’s unclear how DIDI stock will perform if relegated to it.
To answer that question, investors should look at this company from a macro perspective. Since its initial public offering (IPO) last summer, the stock has only fallen. Chinese tech stocks have seen a difficult year overall, as regulatory crackdowns and Covid-19 restrictions continue to compromise investor confidence. But while peers like JD.com (NASDAQ:JD) and Nio (NYSE:NIO) have managed to rebound, Didi has failed to show any sustainable growth.
What It Means
The bottom line? DIDI stock stopped being a viable investment months ago. When a company does nothing but gradually fall after its IPO, investors have to evaluate the root cause. At its root, DiDi is an unstable company that has provided investors with no positive growth catalysts
It’s clear why investors voted in favor of the delisting; DiDi has no hope of seeing growth until the SEC probe ends. But even with trading over the counter there’s no guarantee that shares can rise again.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
