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The shares of Uber ended the day in negative territory after the company’s stake in Didi declined by $2 billion due to regulatory challenges in China.
Uber’s Stake In Didi Drops Massively
Tech company Uber has seen its investment in Chinese ride-hailing giant Didi drop by over 50% in the past few weeks. Uber previously has a $9.4 billion stake in Uber. However, the investment has dropped massively as the Chinese government crackdown on US-listed companies operating in the country.
Didi’s American depositary shares began trading at $14 a share in June on the New York Stock Exchange. However, the price dropped by 21% today and currently trades at $8.02. Uber controls 12% of Didi and is the second-largest investor behind SoftBank. Uber bought the stakes in Didi after selling its Chinese business to the company in 2016.
This latest development led to Uber’s stock price declining earlier today. Year-to-date, Uber’s stock has underperformed. UBER began the year trading at $51 per share but began to decline in May after reaching a yearly high of $62.
Didi Comes Under Fire
Didi has come under pressure from regulators in recent months. There was a high around its IPO, and its market cap reached nearly $70 billion. However, it didn’t get to live long in the spotlight as Chinese officials began carrying out a cybersecurity review of Didi. The ride-sharing company was then asked to postpone its listing and reviews its network security.
The company is facing further tough times after Bloomberg reported earlier this week that Chinese regulators are working on punishments against Didi. The regulators could issue a fine that would surpass the record-breaking $2.8 billion Alibaba paid earlier this year.
Some of the other touted penalties would include the delisting or withdrawal of U.S. shares, sources familiar with the matter told Bloomberg. Regulators in China are planning to limit the ability of Chinese companies to list in America and other foreign markets.
This article was originally posted on FX Empire