Didi shares drop 44% leaves SoftBank and Uber with weak returns

Cheng Wei, chairman and CEO of Beijing Xiaoju Keji Didi Dache Co., stops at the annual conference of Boao Forum for Asia in Boao, China, Wednesday March 23, 2016. The annual event sees business leaders and political leaders come together March 22-25.

Qilai Shen | Bloomberg | Getty Images

Shares of Didi fell 44% on Friday, the biggest one-day drop since the Chinese ride-hailing company went public in the United States in June.

The stock is now 87% below its IPO price, leaving its two largest shareholders – SoftBank and Uber – facing the potential for big losses.

Shares were already in freefall amid a Chinese government crackdown on U.S.-listed domestic companies. Didi said in December that it would withdraw from the New York Stock Exchange and instead list in Hong Kong. Friday, Bloomberg reported that Didi failed to comply with the data security requirements necessary to conduct a sale of shares in Hong Kong.

Softbank owns around 20% of Didi. The Japanese conglomerate’s stake is now worth about $1.8 billion, up from nearly $14 billion at the time of the IPO. Uber’s roughly 12% stake has fallen from more than $8 billion in June to just over $1 billion today.

Uber acquired the stake in 2016 after selling its China operations to Didi. Uber said in its latest Annual Report that in 2021 he recognized an unrealized loss of $3 billion on his investment in Didi.

The hole is widening and reflects a broader headwind for the tech sector, which is getting hammered in the public market.

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Earlier this week, database software maker Oracle said its investments in Oxford Nanopore and Ampere Computing sent fiscal third-quarter earnings down about 5 cents a share. And electric car maker Rivian, which counts Amazon among the top investors, fell 8% on Friday after disappointing forecasts and is now down 63% this year.

For SoftBank, Didi was one of 83 companies backed through its first Vision Fund. Last year, CNBC reported that SoftBank was selling part of its Uber position in part to cover its Didi losses.

“Since we invested in Didi, we’ve seen a huge loss in value,” SoftBank CEO Masayoshi Son said in a February call to discuss results for the nine months ended Dec. 31.

Shares of SoftBank fell 6.6% at the close, while Uber rose 1.2%.

Didi wasn’t the only Chinese tech stock to fall on Friday, although its decline was the biggest. E-commerce sites Alibaba Group and JD.com as well as electric carmaker Nio all fell as fears resurfaced about companies having dual listings in the United States and Hong Kong.

LOOK: Blueshirt Group’s Gary Dvorchak Discusses Didi’s Stock Drop

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