The Strategist

Didi shares soar 56% as investigation in China ends

06/07/2022 - 10:18

Shares of Chinese cab service Didi jumped 56% at the premarket. Earlier, the WSJ reported that Beijing is wrapping up an investigation into the company, and its app could return to stores.

Shares of Chinese cab aggregator Didi were up more than 56% at the premarket, trading at a high of $2.89. At Friday's close, the company's NYSE-traded securities were down 3.14% at $1.85.

Earlier, sources of The Wall Street Journal reported that the Chinese authorities are completing an investigation against the company and intend to lift the ban on new users registration. According to the newspaper, this could happen as soon as this week, along with the return of the Didi app to Chinese stores.

Beijing will also soon complete investigations into two other tech companies that have posted shares in the U.S. - logistics platform Full Truck Alliance and online recruiter Kanzhun, WSJ interlocutors pointed out. All three companies are expected to face financial penalties, with Didi facing a relatively large fine and Kazhun and Full Truck Alliance facing mild penalties. In addition, the companies will be obliged to provide the state with a 1% stake so that the authorities could directly influence corporate decisions.

According to WSJ sources, Chinese regulators, including the China Cyber Administration, notified Didi, Full Truck Alliance and Kanzhun of the plans during meetings last week.