Didi Chuxing’s shares closed a modest 1% on Wednesday afternoon after rising as much as 28.6% on the Chinese ride-hailing giant’s market debut.
The company’s stock began trading at $ 16.65 per share, up about 19% from the company’s offering price of $ 14 per share, which translates into a market cap of nearly $ 80 billion. It closed at $ 14.14 apiece with a market cap of approximately $ 67.8 billion.
According to PitchBook data, Didi was valued at $ 62 billion after a fundraising round in August. Valuation on Wednesday’s first trade is more subdued than the $ 100 billion some had predicted. Nevertheless, it is one of the largest US IPOs in the last ten years.
Didi, who closes in the green, is bucking the trend for carpooling to close below their first retail price. The company’s American counterparts, Uber and Lyft, both closed under the original trade on their 2019 debuts. Lyft started trading at $ 87.24 and closed the day at $ 78.29 while Uber opened at $ 42 apiece and fell to $ 41.57.
Didi’s listing on the New York Stock Exchange comes as demand for ridesharing rises again along with falling Covid-19 cases and a vaccine roll-out. Uber and Lyft have also announced that thanks to the rebound, they will be profitable on an adjusted basis through the end of this year.
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The offer also represents a financial gain for Uber, which owns 12.8% of the shares in Didi following the acquisition of Uber’s China business. SoftBank’s Vision Fund holds 21.5%. Apple also invested $ 1 billion in Didi in 2016.
Didi posted a total loss of $ 2.54 billion on sales of $ 21.63 billion last year, but posted a slight profit of $ 95 million on sales of 6.44 billion in the first quarter of 2021 $ 1.9 billion in investments related to spin-offs and divestments.)
By comparison, Uber lost $ 6.77 billion on sales of $ 11.14 billion last year and $ 108 million in the first quarter of 2021 on sales of $ 2.90 billion.
Didi’s sales shrank nearly 10% between 2019 and 2020 when the Covid pandemic hit China hard last year. However, before the pandemic, sales rose 11% between 2018 and 2019. Additionally, sales rebounded in the first quarter as the pandemic recovery is in full swing, with first quarter growth of 107% year over year.
Didi, which was founded in 2012, stated in its IPO prospectus that it has 493 million active drivers per year 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 making the biggest contributions, according to a Loop research note earlier this month. Part of the proceeds from the IPO will also be used to expand the company’s presence in international markets.
In addition to traditional ride hailing, Didi is investing heavily in making autonomous taxis a reality. The company recently received approval to test self-driving vehicles in Beijing.
Didi is also facing an antitrust investigation against some of the largest Chinese companies. China’s market regulator, the state administration for market regulation, is investigating whether Didi has competitive practices that have unfairly ousted smaller competitors, Reuters reported. It is also reportedly investigating the company’s pricing mechanism.
Didi had warned in his IPO prospectus not to meet with the regulatory authorities at the beginning of the year. The driving company warned that they could face fines as regulators may not be happy with the inspection results.
“We cannot assure you that regulators are satisfied with our self-regulatory results or that we will respond to antimonopoly, unfair competition, pricing, advertising, privacy, food safety, product quality, tax and other related laws and regulations. We expect these areas to be monitored and examined more closely and continuously by regulators and the general public in the future, “said the company in its prospectus.
Didi was joined by a number of other companies that went public on Wednesday, including biometrics screening company CLEAR, digital advertising company Taboola and cybersecurity company SentinelOne.
Didi, a four-time CNBC Disruptor 50 company, ranks fifth on this year’s list.
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