After a drop of nearly 85% in value and a plethora of problems ever since its listing, shares of DiDi Global (DIDI) finally stopped trading on the NYSE on June 10.
However, according to the Wall Street Journal, despite its delisting, shares of the company would still be tradable in the over-the-counter market as of today. This means investors won’t be stuck with the company’s shares.
DiDi’s troubles so far, which are more than a few, may not be going away anytime soon. Although Chinese regulators are finally wrapping up a probe into the company and doing away with the ban on user additions, a Hong Kong listing may not be on the horizon anytime soon. The Chinese authorities are yet to concretize rules on domestic firms’ selling shares offshore.
Furthermore, DiDi has stated it will not float shares at a different location until delisting in the U.S. is completed. While China is looking to prop up its tech sector amid economic challenges, the regulatory relief for these tech names brings some other challenges. According to the WSJ, DiDi, along with other Chinese names, may offer a 1% stake to government entities and provide them a say in corporate actions.
DiDi has a long way to go to drive out of its troubles, but the company is taking steps on this front. It is in talks to acquire a third of electric vehicle (EV) producer Sinomach Automobile. After the successful acquisition, the ride-hailing company will be Sinomach’s second-highest stakeholder.
Hedge Funds
As the ride finally ends, the TipRanks database indicates hedge funds have been dumping DiDi stock. Over the last quarter, hedge funds have decreased holdings in the stock by 12 million shares, which implies a very negative hedge fund confidence signal.
The tool also pinpoints a very interesting find. George Soros, one of the biggest names on the Street, has increased holdings in the stock by over 100% to $14.6 million. Similarly, John Paulson’s Paulson & Co. too has increased holdings in DiDi by 178% to $82.87 million.
Closing Note
As the regulatory hangover subsides DiDi can finally start taking steps to move forward. Most importantly, the possible stake in Sinomach and positive actions by George Soros may indicate interesting times ahead for shareholders.
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