Didi IPO Begins Trading on the NYSE

Shares of Didi Chuxing rose a modest 4% on Wednesday afternoon following a whopping 28.6% gain in the Chinese ride-hailing giant’s market debut.

The company’s stock began trading at $16.65 per share, an increase of approximately 19% from the company’s offering price of $14 per share. The stock traded as low as $14.10 and had reached a high of $18.01.

The company’s market capitalization rose to nearly $80 billion upon opening. According to PitchBook data, Didi was recently valued at $62 billion after an August fundraising round. The valuation as of Wednesday’s first trade has been more muted than the $100 billion some had predicted. Yet it ranks among the largest US IPOs of the past decade.

Didi’s listing on the New York Stock Exchange comes as demand for ride-hailing services picks up again, coupled with declining Covid-19 cases and a vaccine rollout. The company’s U.S. counterparts, Uber and Lyft, have both said they will be profitable by the end of this year on an adjusted basis, thanks to the recovery.

The offer also marks a financial victory for Uber, which owns a 12.8% stake in Didi after it acquired Uber’s Chinese operations. SoftBank’s Vision Fund holds 21.5%. Apple also invested $1 billion in Didi in 2016.

Didi reported a sizable loss of $2.54 billion on revenue of $21.63 billion last year, but made a slight profit of $95 million on revenue of $6.44 billion in the first quarter of 2021. (A portion of the company’s profitability in the first quarter is attributable to capital gains of $1.9 billion related to spin-offs and divestitures.)

In comparison, Uber lost $6.77 billion on revenue of $11.14 billion last year and lost $108 million on revenue of $2.90 billion in the first quarter of 2021.

Between 2019 and 2020, Didi’s sales shrank by nearly 10% as the Covid pandemic hit China hard last year. However, prior to the pandemic, sales grew by 11% between 2018 and 2019. In addition, sales have recovered in the first quarter as the pandemic recovery is well underway, with growth of 107% in the first quarter of the previous year.

Founded in 2012, Didi said in its IPO prospectus that it has 493 million active riders annually and 41 million average daily trades. It began expanding internationally in 2018 and the company now operates in 14 countries outside of China, with Brazil and Mexico being the biggest contributors, according to a research paper from Loop earlier this month. A portion of the IPO proceeds will also go towards expanding its presence in international markets.

In addition to traditional taxi transport, Didi invests heavily in the realization of autonomous taxis. The company recently received approval to test self-driving vehicles in Beijing.

Didi also faces an antitrust investigation into some of the largest Chinese companies. China’s market regulator, the State Administration for Market Regulation, is investigating whether Didi used competitive practices that unfairly ousted smaller competitors, Reuters reported. It is also reportedly investigating the company’s pricing mechanism.

Didi had warned in its IPO prospectus that it was meeting with regulators earlier this year. The ride-hailing company warned that they may face sanctions as regulatory authorities may not be happy with the inspection results.

“We cannot assure you that regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any fine related to violations of anti-monopoly, anti-unfair competition, pricing, advertising, privacy protection, food safety, product quality, tax and other related laws and regulations. We expect these areas to receive greater and continued attention and scrutiny from regulators and the general public in the future,” the company said in its prospectus.

Didi was joined by a slew of other companies that went public on Wednesday, including biometric screening firm CLEAR, digital advertising agency Taboola and cybersecurity firm SentinelOne.

Didi, a quadruple CNBC Disruptor 50 company, number 5 on this year’s list.