DIDI Stock: The ‘Punishment’ Report Sending Didi Global Shares Down Today

Shares of China’s ride-hailing giant Didi (NYSE:DIDI) stock are getting crushed on Thursday after some important news emerged. And with that, it appears that Didi is next on the list for Chinese authorities to continue their crackdown on U.S.-listed companies based in China.

DiDi logo on smartphone

Source: Piotr Swat / Shutterstock.com

According to Bloomberg, Chinese regulators are weighing the possibility of “serious, perhaps unprecedented, penalties” for Didi following its controversial initial public offering (IPO) last month. The move comes after this authority views Didi’s decision to go public “as a challenge to Beijing’s authority.” This is because the firm received pushback from the Cyberspace Administration of China prior to the IPO.

With all of that in mind, the report also states that there will be a number of punishments against Didi. In fact, Chinese regulators could enforce a fine larger than the record $2.8 billion that Alibaba (NYSE:BABA) paid earlier this year. Additionally, some of the other rumored punishments are a suspension of certain operations, delisting or a withdrawal of Didi’s U.S. shares.

Moreover, CNBC reports that “officials from seven Chinese government departments visited the ride-hailing giant’s offices to conduct a cybersecurity review” last week. Also, Didi was no longer allowed to sign up new users. What’s more, its app was removed from Chinese app stores.

That said, the Cyberspace Administration of China also believes that Didi illegally collected user data.

DIDI stock was down nearly 9% as of Thursday morning.

On the date of publication, Nick Clarkson 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.

Nick Clarkson is a web editor at InvestorPlace.


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