Didi reports $6.35 billion loss as China’s regulatory crackdown hits business

Didi said its board had authorised it to pursue a listing of its Class A ordinary shares on the HKSE. PHOTO: REUTERS

TOKYO (BLOOMBERG, REUTERS) - Didi Global reported a massive US$4.7 billion (S$6.35 billion) net loss for the third quarter ended September as it navigates toward delisting its shares in the United States and offering them up in Hong Kong.

The ride-hailing giant has been a focus of a broader Beijing crackdown on big tech. Regulators demanded that the company withdraw from trading in the US over fears its vast troves of data could be exposed to foreign powers

The company reported US$6.6 billion in revenue in its unaudited third-quarter results, down from US$7.6 billion in the previous three months. 

Didi’s app was removed from Chinese app stores in early July, shortly after its initial public offering (IPO) in the US in June, when China’s cybersecurity regulator said an investigation had uncovered problems with the way it collects and uses personal information.

The company’s spending may have risen during the quarter in order to comply with the increased scrutiny from Beijing around the way it governs its drivers and data. Worker rights protections for drivers were formalised into a set of guidelines from Chinese regulators in November.

Didi reiterated its plan to list on the Hong Kong Stock Exchange and ensure that its American depositary shares can be swapped for “freely tradable shares of the company on another internationally recognized stock exchange at the election of ADS holders.” It will organise a shareholder meeting and vote on the matter, Didi said in its earnings report.

Mr Daniel Zhang, the chief executive officer of Chinese e-commerce giant Alibaba Group, who had served as a director on Didi’s board since 2018, has resigned, the company also said.

The company, co-founded in 2012 by former Alibaba employee Will Wei Cheng, was the dominant ride-hailing company in China, now faces stiff competition from ride-hailing services by automakers Geely and SAIC Motor.

Shares of Didi, which had soared in the IPO, giving the company a valuation of US$80 billion and marking the biggest US listing by a Chinese firm since 2014, have since declined 65 per cent.

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.

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