Shares of Didi Chuxing closed at a modest 1% on Wednesday afternoon after rising as much as 28.6% in the Chinese rideshare giant’s market debut.
The company’s stock began trading at $ 16.65 per share, 19% higher than the company’s offering price of $ 14 per share, bringing its market capitalization to nearly $ 80 billion. It closed at $ 14.14 each, with a market capitalization of approximately $ 67.8 billion.
Didi was most recently valued at $ 62 billion following a fundraising round in August, according to data from PitchBook. The valuation as of Wednesday’s first trade is more subdued than the $ 100 billion some had predicted. Still, it is among the largest IPOs in the US for the past decade.
Didi closed the trend of the ridesharing giants in green dollars, closing below its first commercial price. The company’s US counterparts, Uber and Lyft, closed below initial trade on their 2019 debuts. Lyft began trading at $ 87.24 and closed the day at $ 78.29, while Uber opened at $ 42 each. one and it went down to $ 41.57.
Didi’s listing on the New York Stock Exchange comes as demand for private transportation services skyrockets along with the drop in Covid-19 cases and the deployment of vaccines. Uber and Lyft have also said they will be profitable on a tight basis by the end of this year, thanks to the recovery.
The offer also represents a financial gain for Uber, which owns 12.8% of Didi’s shares after it acquired Uber’s business in China. SoftBank’s Vision Fund holds 21.5%. Apple also invested $ 1 billion in Didi in 2016.
Didi reported a comprehensive loss of $ 2.54 billion on $ 21.63 billion in revenue last year, but made a slight gain of $ 95 million on revenue of $ 6.44 billion in the first quarter of 2021 (part of the company’s profitability in the first quarter can be credited to investment gains of $ 1.9 billion related to spin-offs and divestitures).
By comparison, Uber lost $ 6.77 billion on $ 11.14 billion in revenue last year, and lost $ 108 million in revenue of $ 2.90 billion in the first quarter of 2021.
Between 2019 and 2020, Didi’s revenue fell nearly 10% when the Covid pandemic hit China hard last year. However, before the pandemic, revenue grew 11% between 2018 and 2019. Additionally, revenue recovered in the first quarter as the recovery from the pandemic is in full swing, with growth of 107% in the first quarter compared to the quarter of the previous year.
Didi, which was founded in 2012, said in its initial public offering prospectus that 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, with Brazil and Mexico being the largest contributors, according to a Loop research note from earlier this month. Part of the proceeds collected from the IPO will also be used to increase its presence in international markets.
In addition to traditional transportation, Didi is strongly committed to making autonomous taxis a reality. The company recently obtained approval to test autonomous vehicles in Beijing.
Didi is also facing an antitrust investigation at some of the largest Chinese companies. China’s market regulator, the State Administration for Market Regulation, is investigating whether Didi used any competitive practices that unfairly pushed out smaller competitors, Reuters reported. He is also reportedly investigating the company’s pricing mechanism.
Didi had warned in its IPO prospectus that it met with regulators earlier this year. The private transport company warned that they 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. , product quality, taxes 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.
Didi was joined by many other companies that went public on Wednesday, including biometric detection company CLEAR, digital advertising company Taboola and cybersecurity company SentinelOne.
Didi, a four-time CNBC Disruptor 50 company, was ranked No. 5 on this year’s list.
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