Didi Shares Fall Amid Chinese Cybersecurity Probe

Shares in Chinese ridesharing firm Didi dropped more than 5 percent Friday morning (July 2) after regulators in China announced a cybersecurity review of the company.

According to CNBC, this means new users won’t be able to register for the service while the review is underway. Didi issued a statement saying it would provide full cooperation.

“We plan to conduct a comprehensive examination of cybersecurity risks, and continuously improve on our cybersecurity systems and technology capacities,” a spokesperson told CNBC in an email.

The announcement comes just days after Didi went public on the New York Stock Exchange. The stock closed up nearly 16 percent on Wednesday, and Didi had priced its shares at $14, as PYMNTS reported earlier in the week.

This is not the first time Didi has come under government scrutiny in China. As reported in April, the company was one of 13 tech companies summoned to meet with China’s central bank and regulatory agencies following the Ant Group’s derailed IPO plan and subsequent fine for antitrust violations.

And just before Didi launched its initial public offering (IPO), it was investigated by the State Administration for Market Regulations as part of a larger crackdown on Chinese “platform” companies such as Alibaba and Tencent Holdings.

As CNBC points out, Didi warned in its IPO prospectus about its meeting with regulators, and said it might be subject to penalties.

“We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any penalty with respect to any violations of anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, product quality, tax and other related laws and regulations. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the general public going forward,” the company said in its prospectus.

According to its IPO filing, Didi had 493 million annual active users through the trailing 12 months that ended in March, with 15 million annual active drivers and 41 million average daily transactions during that same timeframe.