A tech crackdown in China couldn't come at a worse time for Didi Global.
The Chinese ride-hailing app that debuted on the New York Stock Exchange just days ago saw its shares plummet more than 28% in early trading on Tuesday, wiping billions of dollars off its valuation, after Chinese regulators ordered the app be taken down.
Didi, seen as a potential global rival to Uber, raised $4.4 billion in its initial public offering last week, the largest listing of a Chinese company in the U.S. in 7 years.
But the stock soured after the Cyberspace Administration of China said Sunday the company illegally collected user’s personal data.
Beijing is stepping up supervision of Chinese firms listed offshore. Its cabinet said Tuesday China will improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, among other things.
Other U.S.-listed firms under investigation include truck services startup Full Truck Alliance and online recruiter Kanzhun. That sent Full Truck’s shares down 20% at the market open; Kanzhun fell 11%.
Analysts said all this may push investors to raise questions about Didi’s governance. The Wall Street Journal reported that regulators had warned the company to delay its initial public offering and examine its network security.
Didi told Reuters on Monday it had no knowledge of the investigation before the IPO. It also said the app’s ban would adversely impact its revenue in China.