How Didi went from homegrown hero to being stuck in limbo

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Didi Global (DIDI, NYSE) was at one time the poster child of China’s thriving tech economy. In 2016, Didi was hailed as a homegrown hero after it dented ride-hailing rival Uber’s (UBER, NYSE) global dominance, ushering the Silicon Valley superpower out of the world’s most populous country.

Not only did Didi end Uber’s business in China, it also became the biggest online ride-sharing platform on the planet. A blockbuster IPO last year was the crowning jewel in its journey to the top. It was the largest US listing by a Chinese company since 2014, raising US$4.4 billion at a staggering valuation of US$73 billion.

However, as is so often the case, going public turned out to be an inflection point, after which things went south for the ride-hailing giant. There was trouble brewing underneath the surface: Chinese regulators had already urged Didi to put its US listing on hold over data-related concerns, but the firm went ahead with it anyway.

Didi has had several uncomfortable brushes with Chinese authorities in the past, but this time, the stakes were much bigger – the firm eventually saw over US$60 billion wiped off its market cap. It would also hasten China’s broader efforts to reign in the growing influence of its tech giants.

Just two days after the IPO, Beijing’s internet watchdog would force Didi’s main apps off stores in China and ban the company from registering new users indefinitely. And this was just the beginning of Didi’s woes.

Image credit: Timmy Loen

In a bid to appease Chinese authorities, the company planned to delist from the New York Stock Exchange and return to public markets in Hong Kong. However, even its relisting efforts later hit a stumbling block, leaving the firm’s fate in limbo for the near future.

In March, Didi suspended its planned Hong Kong listing after the Cyberspace Administration of China informed executives that their proposals to prevent security and data leaks had fallen short of requirements.

Compounding Didi’s misery, senior Beijing officials have also pushed back against the internet regulator’s proposed punishments for the firm, saying they were too lenient.

Didi’s trouble with regulation has been primarily on the domestic front so far, but that changed last week when the company confirmed the US Securities Exchange Commission was also investigating its IPO.

It’s hard to imagine you’d end up in the bad books of the world’s two largest economies, but that’s where the once-high-flying Didi finds itself. It seems inevitable that its shareholders will vote to delist the firm from the NYSE on May 23 in the hopes of bringing an end to the company’s tumultuous run in public markets.

However, with its future uncertain and global markets tumbling, Didi will perhaps find some reprieve in private markets, where its stock was a prized possession not so long ago.

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