Didi Global Inc (NYSE:DIDI)’s stock surged in U.S. premarket trading on Friday, after the ride-sharing company from China had announced a possible delisting from the New York Stock Exchange. Didi also said it is lining up a plan to go public in Hong Kong.
As reported by CNBC, Didi stock jumped 14% on Friday right after the company said Thursday “it will delist from the New York Stock Exchange ‘immediately’ and begin preparations for a separate listing in Hong Kong.
“U.S. shares are to be converted into ‘freely tradeable shares’ on another international exchange, according to a statement.”
Ever since its IPO in late June, Didi stock has plunged 40% from the initial price due to the tight regulatory measures undertaken by the Chinese regulator, after raising $4.4 billion on the opening day with shares valued at $14 apiece.
Didi was touted to become the biggest public listing this year, and it became the largest U.S. share sale by any Chinese firm since Alibaba Group Holding Ltd (NYSE:BABA) raised $25 billion back in 2014.
Delisting Rules In The U.S.
The news of the Hong Kong listing plans will keep investors circling around while the U.S. delisting “rules out the risk of it being forced to do by regulators,” CNBC reports. In a Friday note, Neil Campling, global TMT analyst at Mirabaud Equity Research, said that the Didi stock surge was probably due to technical reasons.
He added: “Risk of a delisting could trigger some technical cover trades as shorts may seek to close their positions rather than deal with hassles of waiting out delisting time with custodians.”
Daniel Ives, managing director of Wedbush Securities, told CNBC that the delisting was “just another black eye for Chinese tech stocks,” and asserted that “The Street remains very various of Chinese tech stocks and this Didi situation is another cautionary tale.”
Besides the famous clamp on companies listing in the U.S. initiated by regulators in the Asian giant, Washington is also weighing its own restriction package. The Securities and Exchange Commission has completed a set of rules to delist foreign stocks in case they do not meet audit requirements.