DiDi shares plunged as much as 42% on Friday after a report said that it was halting plans for a Hong Kong Stock Exchange listing.
The Cyberspace Administration of China has reportedly informed executives of the ride-hailing firm that their proposals to prevent security and data leaks did not meet their requirements, Bloomberg reported. Its main apps, which were removed from local app stores in China last year, will remain suspended pending the CAC review.
Plans for the Hong Kong listing, which was originally slated for the summer, have since been suspended following the CAC review, along with DiDi's work to finalize its fourth-quarter earnings as a listing requirement.
DiDi announced plans in December to delist its shares from the New York Stock Exchange this summer, after the move to Hong Kong's exchange, an attempt to reassure Chinese regulators that sensitive data would not be leaked overseas.
“DiDi’s plans to sell shares in Hong Kong and delist in the U.S. reduces risk of a messy, forced delisting by regulators in both China and the U.S. and may signal that Chinese authorities’ crackdown on it has peaked,” Bloomberg Intelligence analysts Matthew Kanterman and Tiffany Tam said in a report.
DiDi debuted with a massive U.S. initial public offering in June last year, at $4.4 billion, which prompted Chinese regulators to target the firm as a potential data leak. The company was placed under a cybersecurity probe and its apps were removed from stores days after the U.S. listing.
The U.S. and China have feuded for nearly two decades over the issue of auditing Chinese companies listed on American stock exchanges. The Holding Foreign Companies Accountable Act of 2020 required U.S.-listed companies based overseas to make their financial audits reviewable by American regulators. This week, the SEC identified five companies as provisionally in violation of the act, though the law would not require them to delist from American stock exchanges until 2024 at the earliest.