Why Are DiDi Shares Trading Lower Thursday?

  • DiDi Global Inc DIDI lost 30% of its daily users since its June U.S. initial public offering following China's tech crackdown, Financial Times reports.
  • Didi's average daily user count for August fell to 10.9 million from 15.6 million in June. However, the number of ride-hailing companies that completed over 300,000 monthly rides grew to 17 for the first time in July, as per China's transport department.
  • China had banned DiDi from signing up new customers while they investigated its data security. The ban is costing DiDi 4 million users per month.
  • The regulators also ordered app stores to remove 25 of Didi's other apps, including those that register new drivers. The regulations banned ride-hailers from onboarding drivers or cars unlicensed for ride-hailing. 
  • In July, just 41% of Didi rides were fully compliant, while Piggy Express stood only 24%, FT reported.
  • Didi's shares have plunged over 40% since the IPO while rivals enticed its customers and drivers with promotions. The peers include Alibaba Group Holding Ltd's BABA Amap, Meituan MPNGF MPNGY Cao Cao Mobility.
  • DiDi is yet to report its Q2 earnings, unlike its peers, which reported weeks ago.
  • Didi could hit a rough patch if China seeks to split or abandon its exclusive agreements with drivers.
  • Price Action: DIDI shares traded lower by 1.45% at $8.16, and BABA shares traded lower by 1.34% at $155.74 in the premarket session on the last check Thursday.
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