Why DiDi Global Stock Is Plummeting Again Today

What happened 

Shares of DiDi Global (NYSE:DIDI), a China-based ride-sharing company, fell again today on worries that the Chinese government could significantly penalize the company for its recent U.S. IPO. 

The tech stock was down by 18.8% as of 11:51 a.m. EDT. 

So what

Bloomberg News reported yesterday that the Chinese government was considering “unprecedented” penalties against DiDi. Those penalties may include anything from a fine to suspension of its operations, or even delisting. 

Image source: Getty Images.

The Cyberspace Administration of China pushed back on DiDi going public, but DiDi went through with it anyway, causing the Chinese government to view the IPO as a threat to its authority, according to the report. 

Last week the Chinese government told the ride-hailing company that it couldn’t sign up any new customers and removed DiDi’s app from Chinese app stores.

China is cracking down on some of its technology companies and recently imposed a massive $2.8 billion fine on the e-commerce company Alibaba. Some sources told Bloomberg that DiDi’s fine could be even bigger.  

This is the second day in a row that DiDi’s stock has fallen on this news. Yesterday the stock fell 11%.

Now what

Investors are right to be concerned about DiDi’s stock right now. The Chinese government has a lot of authority over companies based in the country, and the company’s business is certainly being affected by the government’s decisions right now. 

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And with the potential threat of a massive fine, as well as the threat of being delisted, investors should be very cautious about investing in DiDi right now. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/07/23/why-didi-global-stock-is-plummeting-again-today/

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