Didi Global (NYSE:DIDI) went public on June 29 at a price of $14. After two days of trading, it was over $16. Since then, it’s pretty much been downhill for DIDI stock.

Although the IPO raised more than $4.4 billion, I think it’s fair to say that most of the initial investors in the IPO are disappointed by the stock’s performance since June.

This led me to wonder if Didi Global was the most disappointing IPO of 2021. 

DIDI Stock Compared to Other Large IPOs

According to Renaissance Capital, Didi Global was the 22nd-largest U.S. IPO of all time. It’s also one of four 2021 IPOs on Renaissance’s list of the top-25 U.S. IPOs of all time. Here’s how those four stocks have performed in the wake of their IPOs:

Company	IPO Price	Current Price  As of Oct. 18	% Return
DiDi Global	$14	$8.31	-40.6%
Coinbase Global (NASDAQ:COIN)	$250	$290.71	16.3%
Roblox (NYSE:RBLX)	$45	$77.75	72.8%
Coupang (NYSE:CPNG)	$35	$27.33	-21.9%

Of the four multi-billion-dollar IPOs, the performance of DIDI stock’s is almost twice as worse as Coupang’s since the latter company went public in March. 

Who knows? Maybe by the end of the year, Didi will have turned the corner, and the Chinese government will have lightened its grip on Chinese tech companies. 

In early September, I suggested that investors thinking of buying Didi on the dip should wait for it to fall further. In the past seven weeks, it’s lost almost 10%. Last month, my recommendation was based solely on the possibility that Didi’s regulatory pressures could continue to mount. 

But I did include Didi on a list of ten Chinese stocks to buy in mid-August. However, over the next two weeks, the regulatory clampdown accelerated, making the falling knife that DIDI stock had become uncatchable. 

“While I think the problems Didi is having will get sorted, there is, of course, no guarantee,” I wrote on Sept. 3. “In my August commentary recommending DIDI stock, I agreed with InvestorPlace’s Ian Bezek that shares weren’t going anywhere until investors got clarity on the regulatory issues Didi faces.”

It’s easy to see why some might consider the DIDI IPO to have been a major disappointment. 

But you need to keep two things in mind. 

First, the geopolitical risks of investing in Chinese stocks will always be higher than those of U.S-based companies. Secondly, I don’t think most experts would have predicted what’s taken place in China this year. Beijing’s regulatory clampdown has been unusually harsh. 

The Potential Gains

When Didi went public, it was valued at approximately $68 billion. Today, it’s got a $41 billion market capitalization, so it’s lost $27 billion in value in just four months. 

There are two ways you can look at this loss of value. 

The first is to admit that the company was overvalued before it even listed its shares in July. In July 2019, Didi raised $2 billion in funding. That supposedly gave the ride-hailing company a $62 billion valuation. So it would be reasonable to think that a $6 billion increase of its value over 24 months was overly generous.

The second way to look at the $27 billion loss of value is to assume that the shares tumbled because of the FUD (fear, uncertainty and doubt) of Didi’s situation. InvestorPlace columnist David Moadel writes that Didi’s current state of affairs is filled with FUD. 

He, too, believes the FUD will subside at some point, and when it does, the share price will rocket higher. More specifically, Moadel expects the FUD to subside when the Chinese government stops preventing Didi from adding new users. 

As you consider these two possibilities, I would say that the latter one makes the most sense. Venture capital has gotten pretty good at valuing private businesses. Since it was widely accepted by the industry in July 2019 that DiDi was worth $62 billion, that figure probably wasn’t too far off. 

In my September article, I highlighted InvestorPlace contributor Mark Hake’s suggestion that a permanent ban on Didi in China could cut its value by 66%. That was approximately $32 billion based on its $48 billion market cap at the time.

From where I sit, investors have yet to fully price the possibility of the company being banned into DIDI stock because the shares have only lost $28 billion in value. That’s below the $32 billion that Hake thinks it should lose if such a ban was instituted. 

The Bottom Line

If you are an aggressive investor, I don’t see how you can hold off buying the stock for much longer. 

While it’s possible that the shares can fall much further, it’s also equally likely that they could double overnight when the ban on it accepting new users is lifted. Of course, by then, it will be too late for short-term investors to buy the stock.

So below $9, DIDI remains an excellent speculative buy.  

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.