Didi’s IPO Underwriters Silence While Volatility Dominates

(Bloomberg) — Wall Street’s silence on Didi Global Inc. speaks volumes, as the stock fluctuates well below last month’s first public offering price.

A 25-day lull ended on Monday for US analysts at the banks that made Didi public on June 30. The milestone that typically sparks a spate of new, bullish research has left traders wondering where to turn for more insight into the impact of China’s broadening of regulatory action that began with the ride-announcing giant.

A first look at consensus earnings estimates could have eased volatility by helping traders meet financial expectations for the quarter, even if further developments in China’s crackdown could play a bigger role than any analysts. Didi’s shares closed 43% below their IPO price on Monday after another volatile session. They fell 30% on the last two trading days of last week and fluctuated in volatile trading on Monday.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley last month led a group of 20 banks handling the offer. Spokespersons for each of the three banks declined to comment. Some other insurers include Barclays Plc, Bank of America Corp. and Citigroup Inc.

Among analysts who were not tied to a quiet period — because their bank was not involved in the IPO or because they are based abroad — Didi has two purchases, one held and no sale. The buy-rated analysts did not update their targets during the stock’s plunge this month. The only neutral rating, Atlantic analyst Xiao Ai, fell on Monday.

“While we believe the most likely outcome will be manageable financial and operational penalties, the range of results leaves us unable to recommend the stock until there is more certainty,” Atlantic’s note said.

Street silence

When it comes to US listings of Chinese companies, the silence on Wall Street extends beyond Didi. Full Truck Alliance Co. for example, has not received any initiations since the analyst quiet period ended on July 19. The truck platform was dragged into the Chinese government’s cybersecurity investigation on July 4.

The reticence around Didi and Full Truck contrasts with other recent IPOs. New coverage of Krispy Kreme Inc. for example, was published by at least 10 banks on Monday. Legalzoom.com Inc. received at least eight initiations on Monday after the 25-day silence period expired.

Here’s what Bloomberg Intelligence says:

“Loss of momentum across all North Asian equity sectors, with defensive and low-vol performance besting, suggests risk-off sentiment is building and could continue if earnings season doesn’t provide a much-needed positive catalyst,” Bloomberg Intelligence analyst Marvin Chen wrote in a note.

(Updates the latest trade in Didi in the third paragraph. An earlier update added that Morgan Stanley declined to comment.)

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