Uber Technologies Inc’s (NYSE: UBER) Chinese counterpart, Didi Chuxing Technology Co, could fetch a valuation of over $70 billion, the Wall Street Journal reported based on its initial public offering (IPO) filings.
What Happened: Didi could raise around 8-10% of the valuation via the IPO to invest in technology, expand beyond China, and introduce new products.
Earlier in April, it had raised .5 billion in debt from banks.
Didi overthrew Uber out of China by triggering a price war in 2016. As a result, Uber merged its China unit with Didi for a stake in Didi.
The company plans to list its ADRs under the symbol ‘DIDI.’
Didi reported an FY20 revenue decline of 8.4% year-on-year to CNY141.74 billion, equivalent to $21.63 billion due to the pandemic-led quarantines, travel restrictions, and public gathering restrictions.
The company reported a profit of CNY196 million or $30 million in the first three months of 2021. However, it posted a net loss of CNY10.68 billion, equivalent to $1.63 billion in 2020. It also lost money in the full years 2018 and 2019.
Why It Matters: The value of transactions on Didi’s platform fell by nearly a third in the first three months of 2020 year-on-year due to the pandemic. However, it started recovering from the second half of 2020.
Former Alibaba Group Holding Ltd (NYSE: BABA) executive and Didi founder Cheng Wei owned 7% of the shares and 15.4% of its voting power before the IPO.
The Chinese ride-hailing market is estimated to be worth $99.5 billion by 2023, up from $53.5 billion in 2019. Didi also operates in 14 countries outside China.
Didi runs a logistics service, too, permitting users to book vans with drivers to transport goods between China’s main cities.
Earlier this year, the Chinese regulators penalized Didi and several big tech companies for alleged monopolistic practices. In addition, last month, regulators summoned Didi and nine other mobility companies for a warning over their driver treatment.
Didi has focused on the development of electric vehicles (EVs) in partnership with legacy auto players. Last month it collaborated with state-run automaker Guangzhou Automobile Industry Group to develop autonomous EVs. It began working on autonomous driving abilities in 2016 and launched a robotaxi service in Shanghai last year.
Price action: UBER shares traded higher by 0.69% at $49.89 in the premarket session on the last check Friday.
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