Shares of Chinese ride-hailing company Didi fell 44% in Friday trade, CNBC reported. It was the biggest one-day drop since the company listed its shares in the US in June last year.
Didi’s stake is now 87 percent below its IPO price, leaving the company’s two main shareholders, SoftBank and Uber’s Masayoshi Son, facing the potential for heavy losses.
In December, Didi’s shares plunged amid the Chinese government’s crackdown on domestic companies listed in the US. On Friday, Bloomberg reported that Didi failed to meet the data security requirements needed to conduct an IPO in Hong Kong.
Softbank owns about 20% of Didi’s shares. The Japanese conglomerate’s shares are now worth about $1.8 billion, down from nearly $14 billion at the time of the IPO. About 12% of Uber’s shares have fallen from more than $8 billion in June to more than $1 billion today.
Uber acquired Didi’s stake in 2016 after selling its China business to Didi. In its most recent annual report, Uber said that in 2021 it recorded a $3 billion loss on its Didi investment.
The hole is deepening and reflecting a wider windfall in the technology sector, which is being mass marketed.
Earlier this week, database software maker Oracle said its investments in Oxford Nanopore and Ampere Computing had slashed profit in its fiscal third quarter. And electric car maker Rivian, considered Amazon’s darling, saw its stock drop 8% on Friday after disappointing forecasts and a total decline of 63% this year.
As for SoftBank, Didi is one of 83 companies he has invested in through Vision 1. Last year CNBC reported that SoftBank sold some of its Uber shares to cover Didi’s losses.
“Since investing in Didi, we’ve seen a huge loss in value,” said Masayoshi Son, SoftBank’s CEO, during an earnings call in February.
SoftBank shares were down 6.6% at the close of trading Friday, while Uber shares were up 1.2%.
Didi wasn’t the only Chinese tech stock to fall on Friday, though the company’s decline was the biggest. Shares of e-commerce firms Alibaba Group and JD.com as well as electric car maker Nio all fell.
Not only have to endure pressure from within the country, Chinese companies are also facing tightening measures from the US government. The US Securities and Exchange Commission (SEC) recently announced regulations, which force foreign companies to disclose their financial books to the authorities or they will be removed from the New York Stock Exchange. York, Nasdaq within 3 years.
By Business and Marketing