China’s ride-hailing giant Didi Global on Wednesday reported a $4.7 billion loss for the third quarter as its domestic business took a hit from a regulatory crackdown.
Daniel Zhang, the chief executive officer of e-commerce giant Alibaba Group Holding, who served as a director on Didi’s board since 2018, resigned, the company said. The company’s shares plunged more than 8% in New York trading.
Chinese authorities have come down hard on Didi, after its New York Stock Exchange (NYSE) listing in June, demanding it take down its app from mobile stores while the Cyberspace Administration of China investigated its handling of customer data.
The restriction hit Didi, co-founded in 2012 by former Alibaba employee Will Wei Cheng and backed by SoftBank Group, which was the dominant ride-hailing company in China.
The company now faces stiff competition from ride-hailing services by Chinese carmakers Geely and SAIC Motor.
Didi’s revenue for the third quarter to September 30 fell to 42.7 billion yuan ($6.71 billion) from 43.4 billion yuan a year earlier.
Under pressure from Chinese regulators concerned about data security, Didi in December decided to delist from the NYSE and pursue a Hong Kong listing.
Shares of Didi, which had soared in their IPO giving the company a valuation of $80 billion and marking the biggest US listing by a Chinese firm since 2014, have since declined 65%.
Didi’s still-listed NYSE shares fell more than 8% by the close on Wednesday to $4.94.
“The shares seem overly concerned about a re-listing that should have little fundamental impact,” Guy Foster, a strategist at UK wealth manager Brewin Dolphin, said.
“However, the long-term outlook is challenging for Chinese tech platforms, which are now expected to contribute towards common prosperity in China,” he added.
Didi said on Wednesday its board had authorised it to pursue a listing of its class A ordinary shares on the main board of the Hong Kong Stock Exchange.
The company “will update investors in due course”, Didi said.
As of December, 13 of the 25 highest-capitalisation US-listed China companies – which issue American Depositary Receipts (ADRs) – already have a dual listing in Hong Kong.
“Didi’s delisting proposal could serve as an example for other China ADRs that currently do not have a dual listing in the Hong Kong stock market,” Jason Lui, East Asia strategist at BNP Paribas, said.
Didi, which is expanding its presence in Europe and South America, said revenue from its international operations nearly doubled to 966 million yuan in the quarter.
Net loss attributable to ordinary shareholders was 25.91 yuan.
- Reuters with additional editing by George Russell