DiDi Global (DIDI) IPO: What You Need To Know

Ride-hailing service DiDi Global (DIDI) made its debut on the NYSE on June 30, at $14 a share, valuing the company at $68 billion, making DiDi’s the biggest IPO of a Chinese company listed on an American exchange since Alibaba’s (BABA) in 2014, which raised $25 billion.

Only a handful of other firms have had larger IPOs over the past decade, including rival ride-hailing powerhouse Uber, which had raked in $8.1 billion, for a valuation of $75 billion. Uber (UBER) began trading on the NYSE on May 10, 2019, at $42 a share.

DiDi was founded in 2012 by former Alibaba Group alumni Will Wei Cheng, who has led the company as CEO since its inception. Headquartered in Beijing, DiDi operates in multiple countries across Asia, Africa, Latin America, Eastern Europe, and Australia. 

The company’s primary business lies in its app-based ride-hailing service, and has over the years acquired several of its rivals in China and abroad through mergers and acquisitions (M&A), notably including Kuaidi Dache and Uber China. Though China is home to a number of competing ride-hailing companies like CaoCao Chuxing, Yidao Yongche, Dida Pinche, DiDi is the undisputed market leader and is estimated to control over 90% of the market share of the country’s ride-hailing service segment. 

The company went public at a time when many of China’s largest tech companies are under increased scrutiny from Chinese regulators, as part of broader antitrust crackdown resulting in fines and mandatory restructuring for many including Tencent and JD.com, and the suspension of IPO plans of Ant Group in 2020. In its registration filing with the U.S. Securities and Exchange Commission (SEC), DiDi addressed regulatory uncertainties in the U.S. and in China.

Financials

• DiDi earned a profit in the first quarter of 2021, earning 196 million yuan (roughly $30.3 million).
• Annual revenue fell 8.4% to 141.7 billion yuan ($21.6 billion) in 2020.
• DiDi reported annual losses in 2018, 2019, and 2020.
• DiDi’s app boasted nearly 600 million users and driver partners, and an average of 60 million daily trips in 2021.
• Major shareholders include SoftBank Vision Fund (21.5%), Uber (12.8%), Tencent (6.8%). 

DiDi's leadership team CEO Will Wei Cheng, President Jean Qing Liu, and Senior Vice President Stephen Jingshi Zhu cumulatively hold just under 10% of Class B ordinary shares and 52% of total voting power. DiDi's Class B shareholders will be entitled to 10 votes per share. SoftBank and Uber were two of its largest shareholders at the time of its IPO, holding 21.5% and 12.8%, respectively, as well as Tencent with 6.8%. Goldman Sachs, Morgan Stanley, and J.P. Morgan led the IPO as underwriters.

Competitive Market 

In addition to Uber, DiDi's international ride-hailing competitors include Lyft, Grab, Gojek, and Ola, among others. DiDi competes with Uber in many parts of Latin America, and with Ola in Australia. Uber sold its China-based operations to DiDi in 2016, and ceded much of its Southeast Asian business to Grab in 2018. 

Like some of its international competitors such as Uber, DiDi is also involved in technological research and development related to electric vehicles and autonomous driving. In 2016, the company spun off its autonomous driving unit, and plans to make continued investments in emerging technologies.

The Bottom Line

DiDi would be hard-pressed to challenge local players with established positions in their home markets, such as Uber in the U.S., or Ola in India. However, its position in China and other countries, particularly in emerging markets where it has a first mover advantage, give it a solid foothold from which to expand on its position as of the world’s biggest players in the ride-hailing space.