Chinese firm, Didi Global, hit $68 billion after U.S. debut

Didi Global Inc made its long-awaited debut as a public company on Wednesday. Its shares ended their first day of U.S. trading slightly over their initial public offering price, valuing the firm at $68.49 billion in the biggest U.S. listing by a Chinese firm since 2014.  Significantly, Didi Global is the Chinese riding-hailing company that dominates China.

Didi’s stock started traded at $16.65 per share, up around 19% from its offering price of $14 per share. Its market capitalization hit nearly $80 billion. However, the shares declined in the early afternoon after reaching an $18 high. It closed at $14.14 apiece, with a market capitalization of about $68 billion.

The company was most recently valued at $62 billion following an August fundraising round. Although the valuation as of Wednesday’s first trade is more muted than the $100 billion anticipated, it ranks among the largest U.S. IPOs over the past decade.

Around 29 Chinese companies raised $7.6 billion in U.S. IPO’s in the first half of the year. This is despite the continuing economic tensions between the U.S. and China. Moreover, the U.S. concerns over the quality of the auditing of Chinese firms’ financial statements.

Remarkably, Didi is also under investigation by Chinese authorities over potential antitrust violations.

Didi’s American counterparts, Uber and Lyft, both closed below the initial trade in their 2019 debuts. Lyft started trading at $87.24 and closed at $78.29. Meanwhile, Uber opened at $42 apiece and declined to $41.5.

Didi had historically been unprofitable until the first quarter of 2021

Between 2019 and 2020, Didi’s revenue declined about 10% as the coronavirus pandemic hit China hard last year. However, before the pandemic, revenue increased 11% between 2018 and 2019. Additionally, revenue has recovered in Q1, with 107% growth in the first quarter from the previous year’s quarter.

Like most ride-hailing companies, Didi had historically been unprofitable until it published a profit of $30 million in the first quarter of 2021.

Didi was founded in 2012 and has a dominant position in the online ride-hailing business in China. The firm said in its IPO prospectus that it has 493 million annual active riders and 41 million average daily transactions. It started expanding internationally in 2018. Didi now operates in 14 countries outside of China, with Brazil and Mexico being the largest contributors.

Moreover, its offerings include private car-hailing, sharing bikes, delivery, freight and logistics, and financial services.