China's biggest ride-hailing company Didi fell in pre-market trading after a Chinese regulator ordered the removal of the company’s platform from app stores, days after a $4.4 billion initial public offering in the US.
The company's shares fell by as much as 30 per cent to $10.90, wiping out about $22bn in market value and taking the stock below the $14 IPO price. They traded at $12.33 as of 5.07am in New York (1.07pm UAE time).
The Cyber Space Administration of China barred new users from Didi’s app, citing security risks. Beijing is in the process of a wider clampdown on the nation’s Big Tech companies.
Didi, whose American Depository Receipts have only traded in New York since June 30, said the move may have an “adverse" effect on its revenue in China.
While its 500 million existing users will still be able to order rides for now, China’s cyber security clampdown adds to the uncertainty surrounding all of the nation’s internet companies.
Tencent, which has a stake in Didi, is down 2.7 per cent so far this week, after sliding by 3.6 per cent on Monday and partially trimming losses on Tuesday. The government announcements came on Friday after markets in Asia closed.
Chinese regulators asked Didi as early as three months ago to delay its US IPO because of national security concerns involving its huge trove of data.
Uber, the second-biggest Didi stake holder, fell by 1.9 per cent in pre-market trading. The US stock market was closed on Monday for a holiday.
Full Truck Alliance and Kanzhun, both of which recently went public in the US, decline by 14 per cent and 10 per cent, respectively, after China expanded its probe on the technology industry to include both companies.
Beijing ordered them and Didi to halt new user registrations.
The number of companies based in China filing for New York listings has climbed for a third straight quarter despite weakness in other US-listed stocks that conduct most of their business in China and amid the broad antitrust probe into the nation’s internet companies.
The Nasdaq Golden Dragon China Index is down by about 8 per cent for the year, lagging behind the 14 per cent gain in the Nasdaq Composite Index.