Shares of Uber ended the day in negative territory after the company’s stake in Didi fell by $2 billion due to regulatory challenges in China.
Uber’s stake in Didi plummets
Tech company Uber has seen its investment in Chinese ride-hailing giant Didi fall by more than 50% in recent weeks. Uber previously held a $9.4 billion stake in Uber. However, the investment has plummeted as the Chinese government cracks down on US-listed companies operating in the country.
Didi’s US deposit shares traded on the New York Stock Exchange in June at $14 a share. However, the price is down 21% today and is currently trading at $8.02. Uber owns 12% of Didi and is the second largest investor behind SoftBank. Uber bought the stake in Didi after selling its Chinese operations to the company in 2016.
This latest development led to: Uber’s share price fell earlier today. Year-to-date, Uber’s stock has underperformed. UBER started the year trading at $51 a share, but started falling in May after hitting an annual high of $62.
Didi comes under fire
Didi has come under pressure from regulators in recent months. There was a high around the IPO and the market cap reached almost $70 billion. It didn’t stay in the spotlight for long, though, as Chinese officials began conducting a cybersecurity assessment of Didi. The ride-sharing company was then asked to defer listing and review network security.
The company faces further difficult times after Bloomberg reported: earlier this week that Chinese regulators are working on penalties against Didi. The regulators could impose a fine that would surpass the record-breaking $2.8 billion that Alibaba paid earlier this year.
Some of the other sanctions touted include delisting or withdrawing US stocks, sources familiar with the matter told Bloomberg. Regulators in China plan to restrict Chinese companies’ ability to list in America and other foreign markets.
This one article was originally posted on FX Empire