DiDi Global, the Uber of China, drives into disaster after going public – The Average Joe
Business Economy Tech Subscribe About Us

    DiDi Global, the Uber of China, drives into disaster after going public

    victorlei

    July 5, 2021

    didi stock

    On June 30, DiDi (NYSE:DIDI), the Uber of China, went public in the US market. Two days later, the Chinese government ordered the removal of Didi’s app from Chinese app stores for issues related to collecting/using customer data.

    • Existing users can still use DiDi’s app but new users are prevented from signing up until a “cybersecurity review” is completed.

    What’s the big deal? China is going after the largest Chinese tech companies — making sure they play by the rules to prevent them from getting too powerful. As the largest ride-hailing app in China, DiDi is no exception. In the past few months:

    • E-commerce giant Alibaba was given a record $2.8b fine for monopoly violations.
    • Other companies including Tencent (Wechat owner), ByteDance (TikTok owner) and JD were given warnings.

    Given the big regulatory threat, many of these have underperformed the market average in 2021.

    The bigger picture: The common thought among analysts — the threat isn’t going away in the short term. Here’s how different analysts see the future of Chinese tech stocks (via WSJ):

    • The regulatory crackdown could last years but tech stocks are still interesting. Focus on smaller, faster-growing and less mature companies (i.e. short video and social networks). — Lucy Liu of Blackrock.
    • Chinese stocks are more fairly priced and offer the best medium-long term growth potential outside the US. — Yichan Shu of State Street Global Advisors.

    Looking forward: Many of these tech giants are still growing at breakneck speeds and Jack Siu of Credit Suisse sees investor interest picking up near the end of 2021 if China’s policies become clearer.

    Trending Posts