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May 3, 2022, 11:27 p.m. EDT

Didi stock slumps after disclosing SEC investigation into its 2021 IPO

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By Mike Murphy

Chinese ride-hailing company Didi Global Inc. said it is under investigation by the Securities and Exchange Commission regarding its 2021 IPO, sending shares tumbling in after-hours trading Tuesday.

The three-sentence disclosure was included in a larger SEC filing Monday. Bloomberg News first reported it Tuesday afternoon, and Didi’s American depository receipts slid 7% in the extended session, after finishing the regular trading day up 1%.

“After our initial public offering in the United States, the SEC contacted us and made inquiries in relation to the offering,” Didi said in the filing . “We are cooperating with the investigation, subject to strict compliance with applicable PRC laws and regulations. We cannot predict the timing, outcome or consequences of such an investigation.”

Didi launched a massive $4 billion U.S. IPO last June. But soon after Chinese authorities announced it was investigating the company for allegedly violating data-privacy and national-security laws and blocked new users from downloading the Didi app. That came amid a push by China to rein in offshore IPOs by Chinese companies, and also amid moves by U.S. regulators to crack down on Chinese companies that don’t comply with U.S. auditing rules.

In December, Didi said it planned to delist from the New York Stock Exchange and list instead in Hong Kong. Shareholders are set to vote on the delisting on May 23. In an earnings report last month, the company announced a 12% drop in fourth-quarter revenue .

Didi’s ADRs have slumped 44% year to date, and have fallen almost 60% since the IPO.

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