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Yahoo Finance's Emily McCormick details Didi's announcement that it will pivot from the NYSE to Hong Kong.
- Shares of Chinese ride hill company, Didi, were up, but sharply reversed course, after announcing plans to delist from the New York Stock Exchange. Instead, listing in Hong Kong, bowing to pressure from Beijing, and here with more is our Yahoo Finance's Emily McCormick. Emily, what's prompted this move?
- Well, Karina, this is a really quite an interesting move here by Didi Global, a quick reversal. The company had just gone public earlier this year back in June on the New York Stock Exchange, and now that company has announced plans to withdraw from US stock exchanges, and as you mentioned, instead work towards a Hong Kong share sale. Now specifically, Didi's board announced today, it has authorized the company to file for a delisting from the New York Stock Exchange, less than a year after going public on it, and as it pursues this Hong Kong listing, it did say that it will ensure that its US stock will be converted into freely tradable shares.
Now in terms of the timing for this, Didi is reportedly looking to file for that listing in Hong Kong around March according to Bloomberg, and this move by Didi, also comes following a previous report last week that Chinese regulators had asked the company to come up with a plan to withdraw from US exchanges because the Chinese government was concerned that sensitive data would be leaked to the US.
Now we know that Didi Global has been under a tremendous amount of regulatory scrutiny from Beijing. It was actually removed from app stores in China just earlier this year, again, because of these concerns around data privacy. So this is something that had been coming or had been speculated, might be coming by a number of Wall Street analysts as well, here. But meanwhile of course, we should point out that there have been ongoing concerns for other US listed Chinese companies, as well, in recent weeks, and in recent months.
And just yesterday, we should also point out that the SEC had announced plans on how it will identify companies subject to delisting, and it also created a procedure for removing companies that don't comply with regulations and auditing procedures off of exchanges. And we can see here, we are seeing a number of these major US listed Chinese firms trading lower in the afternoon session here, a lot of red across the screen. When we think about many of these major stocks, including Alibaba including Baidu, Pinduoduo, and jd.com, and if we take a look here, shares of SoftBank even, which has a more than 20% ownership of Didi Global, also moving lower today on the heels of this news.
So definitely a lot of pressure here that we're seeing for this stock. It's off more than 18%, as we speak in afternoon trading. Trading just around that $6.30 range. After pricing its IPO of course, at $14 a share back in June. So definitely a big downward slide that we've been seeing in the valuation of this stock over the past couple of months, and even in today's session alone, guys.
- And Emily, real quick here, just-- I'm reading some analysts' commentary about this. These companies if they go back to Hong Kong, they're probably not going to be valued as high, right?
- Absolutely, Jared, that is something that a number of Wall Street analysts have highlighted here. The other thing that we should point out for Didi Global, or any other companies that choose us to go this route, is that they still can be traded OTC, or over the counter by US investors. Although, that would likely take place with lower liquidity and investor protection. So something that investors are probably thinking about here as we see this downward move in the stock today, guys.