- Shares of Didi climbed up to 14% in US premarket trading on Friday.
- Didi says she plans to delist from the New York Stock Exchange “immediately.”
- The Chinese ride-hailing firm is set to pursue listing in Hong Kong instead.
Didi shares rose up to 14% in US premarket trading on Friday after the company announced plans to delist from the New York Stock Exchange and pursue listing in Hong Kong instead.
Shares of the Chinese ride-hailing giant have been hit by a regulatory crisis in its home country since its initial public offering in the US earlier this year. The stock is down about 40% from its initial listing price of $14 per share.
Didi’s share price was up 9.5% at around 4:45 p.m. ET.
The company said on Thursday it would “immediately” delist from the New York Stock Exchange and begin preparations for a separate listing in Hong Kong. The US shares are to be converted into “freely tradable shares” on another international exchange, according to a statement.
Neil Campling, global TMT analyst at Mirabaud Equity Research, said technical reasons could lead to a rally in Didi’s shares.
Campling said in a note Friday morning, “The risk of being out of the list may trigger some technical cover trades as shorts may try to close their positions instead of dealing with the hassle of waiting for the delisting time with the custodian.” Huh.”
Regulators in Beijing are flexing their muscles in an effort to keep big Chinese internet companies in line. The clampdown began with Alibaba founder Jack Ma and his fintech company Ant Group, whose IPO was suspended late last year following critical comments from the Chinese tech billionaire at regulators.
Beijing’s technical action soon moved to other areas, including ride-hailing. Chinese regulators had reportedly raised concerns about the security of Didi’s data ahead of the company’s IPO in June. Two days after its debut, Didi faced scrutiny from Beijing’s cyberspace agency. A week later, officials ordered the Chinese app store to remove Didi’s main app.
According to a Businesshala report last week, Chinese regulators asked the firm’s executives to come up with a plan to delist from the US, with Didi declined to comment at the time.
Meanwhile, Washington is also seeking to impose sanctions on Chinese companies operating on American exchanges. On Thursday, the US Securities and Exchange Commission finalized rules allowing foreign stocks to be delisted for failing to meet audit requirements.