Didi Global’s shares fall 10% after China launches cybersecurity probe

Just two days after launching an IPO, Didi Global's shares fell more than 10% in New York following a cybersecurity review of the company, by Chinese regulators, on Friday. 

Bejing’s cyberspace agency launched an investigation into the ride-hailing firm citing protection of national security and the public interest. The announcement does not allow new users to register for Didi’s services during the review.

The stock had jumped as much as 28.6% on Wednesday after pricing at $14 apiece but closed up just 1% higher at $14.14. On Thursday, Didi’s shares closed up at 15.98%.

Reuters reported that Didi's debut on Wednesday was the biggest U.S. listing by a Chinese company since Alibaba Group Holding Ltd in 2014.

Last month, the Chinese government investigated the ride-hailing company for antitrust violations and scrutinized its pricing mechanism.

In its IPO prospectus, Didi stated, "We follow strict procedures in collecting, transmitting, storing and using user data pursuant to our data security and privacy policies."

Didi has 493 million annual active riders, and 41 million average daily transactions. Backed by Alibaba, Tencent, and Uber, Didi was founded in 2012 by Cheng Wei as Didi Dache and began international expansion in 2018. Currently, it operates in 14 countries, excluding China.

This is not the first time, China has cracked the whip on technology companies. Last year, the government delayed the IPO of Ant Group in Shanghai and Hong Kong. The government regulators penalized the conglomerate for abusing the market. The executives, including chairman Jack Ma, were interviewed, and the company was fined $2.8 billion in April 2021. 

At 1:16 PM ET, Didi was trading at $15.09 share apiece, down 7.99% on the New York Stock Exchange.

Picture Credits: Reuters