DiDi Global Gets a Lifeline From Chinese Regulators — DIDI Stock Forecast

Rachel Curry - Author
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Jun. 6 2022, Published 12:13 p.m. ET

After going public in July 2021, DiDi Global, Inc. (DIDI) got hit with a seemingly insurmountable regulatory hurdle. The Chinese government stopped the DiDi rideshare app from accepting new users just one day after the stock went public in the U.S., which caused an ongoing plunge in share price. Now, China appears to be easing up and DIDI stock may be getting a lifeline.

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Here’s what to know about where DiDi stands with the Chinese government, plus a forecast for DIDI stock now that the company may be able to breathe.

The Chinese government concluded the investigation into DiDi and eased restrictions.

Nearly one year after DiDi Global went public on the New York Stock Exchange and the Chinese government banned the rideshare app from adding new users, the tides are shifting.

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As China concludes its investigations into DiDi Global, the app is poised to begin accepting new users as soon as next week. DiDi will then be able to show its app on Chinese app stores.

China initially placed restrictions on DiDi for a mix of reasons, many of which remain opaque. However, we can presume it had something to do with China’s strong push for increased data security, antitrust blocking, and the hindering of international stock listings outside of the nation’s domestic exchanges.

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Looking back on DIDI stock history

After going public in mid-2021, DIDI stock lost 48.1 percent of its value within three weeks. By June 3, the stock had fallen 88.09 percent into the red from its IPO price. Despite a few substantial upturns, DIDI stock managed a continued downward trend. Growth was practically a moot point while the Chinese government held firm to its restrictions, although the company did make strides in electric vehicle (EV) ridesharing technology in the meantime.

In pre-market trading on June 6, DIDI stock jumped 64.52 percent. The news of easing restrictions propelled the rally. Since the market open on June 6, DIDI has cooled with a 15.85 percent downturn. Despite that, this particular upswing has the potential to be more sustainable than previous pushes given the circumstances behind the rally.

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Moving forward: A forecast for DIDI stock

Before the regulatory pullback, analysts' estimates for DIDI stock were limited. The company’s hindered presence led to a general avoidance of the stock. However, the future is brighter. While it’s still a long way from where it started, it’s possible that DIDI and other Chinese stocks may be able to escape the strict regulatory environment that has defined Chinese business as of late.

All of that is to say that DiDi could become a swing- or long-term play in the future, though uncertainty remains.

It isn't just DiDi that's seeing a light at the end of the tunnel. Other Chinese stocks and funds are feeling relief, too. Companies like Full Truck Alliance (YMM) and Kanzhun (BZ), both of which trade shares on U.S. exchanges, are also seeing increased inflow volume on news of the investigation ending. These companies were also part of the investigation and their apps will return to domestic app stores along with DiDi.

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