Didi shares tumble after China announces cybersecurity review

Didi’s shares fell more than 6% on Friday morning after China, where the company is based, announced a cybersecurity review.

According to an English translation of the announcement from China, new users will not be able to register for Didi’s ride-sharing service during the country’s cybersecurity review.

China’s move comes just two days after Didi made its IPO on the New York Stock Exchange. The stock was set to show another day of gains after closing nearly 16% on Thursday. Didi shares had risen about 5% in pre-market trading before China published its announcement.

Didi said in a statement that it will “cooperate fully” during the review.

“We plan to conduct a comprehensive cybersecurity risk review and continually improve our cybersecurity systems and technology capabilities,” a spokesperson told CNBC in an email.

China’s announcement also reflects a broader trend of the country’s regulatory crackdown on once-under-regulated tech companies based there. In June, Reuters reported that Chinese regulators were investigating Didi for antitrust violations. Beijing is also reportedly investigating the company’s pricing mechanism.

And last fall, Ant Group’s IPO in Shanghai and Hong Kong was delayed after Chinese regulators stepped in and interviewed the company’s top executives, including Chairman Jack Ma. Regulators hit Alibaba with a fine. $ 2.8 billion in April, saying the company abused its market dominance.

Didi had warned in its IPO prospectus that it met with regulators earlier this year, along with several other Chinese internet companies. The private transport company said it could be subject to sanctions, as regulatory bodies may not be satisfied with the results of the inspection.

“We cannot assure you that the regulatory authorities will be satisfied with the results of our self-inspection or that we will not be subject to any penalties with respect to any violation of antitrust, anti-unfair competition, pricing, advertising, privacy protection, food safety, quality. product, tax and other related laws and regulations. We expect these areas to receive continued increased attention and scrutiny from regulators and the general public in the future, “the company said in its prospectus.

Founded in 2012, Didi said it has 493 million annual active passengers and 41 million average daily transactions. It began expanding internationally in 2018 and the company now operates in 14 countries outside of China.

In addition to traditional transport, Didi invests heavily in making autonomous taxis a reality and operates various segments around mobility.

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