Didi joins China’s worst US IPOs after new regulatory pressure

(Bloomberg) — Didi Global Inc. is quickly becoming one of this year’s worst IPOs among foreign companies on news that China is considering additional penalties – from fines to delisting – for the ride-hailing giant.

Didi shares plunged nearly 10% in New York on Thursday, pushing their decline to 26% below its first public offering price set less than a month ago, after Bloomberg reported Chinese regulators are considering tougher measures.

Thirty-seven companies based in China and Hong Kong took shares in New York this year at a record pace, raising nearly $13 billion. But returns have yet to match the bustle of activity. According to Bloomberg data, the shares are trading 9.1% below their IPO price on average.

RLX Technology Inc., a vaping company based in Hong Kong, is the worst performing of all deals to raise at least $500 million and is down about 50% from its January IPO price. Didi is next, followed by software maker Full Truck Alliance Co Ltd., which is trading 17% below its June 22 IPO price.

Didi’s trials, amid wider crackdown by Chinese regulators against tech companies, have already worsened prospects for further Chinese listings in the US this year. For some, including Loop analyst Rob Sanderson, the weakness in the stock will likely fade over time.

“While the path of events is unclear and not without further downside risk, we believe this period of uncertainty will be a buying opportunity for the industry at large,” he wrote in a note on Thursday.

The underlying issue with China’s regulatory crackdown is about data sovereignty, Loop added, rather than a preferred location for listing.

Read More: Didi Crackdown Deteriorates Record Year for US IPOs in China: ECM Watch

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