In July 2021, DIDI Global, Inc. (OTCMKTS: DIDIY) was one of the many tech behemoths subject to the ire of the Chinese government, which launched a data security probe into the company. This came days after DiDi raised $4 billion from its IPO in New York. Regulators also pulled its app from Chinese app stores after declaring it was "illegally collecting user data."
At the time, DiDi was the largest mobility platform in China, with over 500 million annual active users and backing from Uber and SoftBank. Since then, it has started to lose market share to its competitors as it was unable to gain new users through its app. The company was also prevented from listing its shares on the Hong Kong stock exchange.
Regulators have imposed a fine of 8 billion yuan ($1.28 billion) on DiDi. This equates to roughly 4.7% of the company's total revenue last year and 2 billion yuan less than what the company set aside for a potential fine. Regulators will also allow DiDi to return to the Chinese app stores, which should help it regain some of the market share it lost during the past year. Approval has also been granted to the company to proceed with its planned listing on the Hong Kong stock exchange.
Investors are hopeful the fine will mark the end of a troubled year for DiDi and allow it to get back to business as usual. The news sparked a 13.31% rise in the company's share price in after-hours trading. However, the harsh restrictions placed on the company caused its market capitalization to collapse by 70% over the past 12 months. The company won approval from its shareholders in May to delist from the New York Stock Exchange in December, as it looks to switch to the Hong Kong exchange. The company still has a long way to go before it is back up and running properly with fewer restrictions, but this is certainly a positive first step for investors.
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