Shares of Didi Global (NYSE:DIDI) are getting crushed in pre-market trading on Tuesday just days after the Chinese ride-hailing app’s U.S. initial public offering. The American Depository Receipts (ADRs) for DIDI stock were down nearly 20% by 8 a.m. Eastern after a Chinese regulator ordered the removal of the company’s platform from app stores.
The Cyberspace Administration of China blocked new users from Didi’s app, citing security risks and tightening its grip on sensitive online data. The agency said it will conduct a cybersecurity review of the company.
The Wall Street Journal reported earlier today that the company was warned by regulators to delay the IPO and examine its network security. In June, Reuters reported that Chinese regulators were probing Didi for antitrust violations. Beijing is also reportedly looking into the company’s pricing mechanism, CNBC reported.
DIDI Stock Debuted in Recent Days
The ADRs have traded in New York for less than a week since their June 30 debut. Last week’s IPO was a landmark for the company’s core backers, which included some of the biggest names in the ride-hailing and tech investing space. These included Uber (NYSE:UBER) and Tencent (OTCMKTS:TCEHY).
Investors were quick to spend $4 billion for the offered 288 million ADRs despite the fact that the ride-hailing company isn’t currently profitable. It already covers 90% of the Chinese ride-hailing market.
Didi said the move may have an “adverse impact” on its revenue in China. The Beijing watchdog’s crackdown on tech firms has rocked a roster of big names, delaying planned IPO of Ant Group in November and spurring a record $2.8 billion fine on Alibaba (NYSE:BABA) after an antitrust probe found it had abused its market dominance.
On the date of publication, Robert Lakin did not have (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.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.