Didi disclosed a net loss of $1.60 billion for last year as the ride-sharing firm proceeds with its plans to have an IPO (Initial Public Offering) in the US. In the company’s first-ever application for a publicly listed status here, Didi mentioned that $100 million is the offering. That financial placeholder would change if Didi reveals terms for its share sale. It filed for the offering as Xiaoju Kuaizhi Inc., as Goldman Sachs, JPMorgan Chase, and Morgan Stanley lead the offering.
As one of SoftBank Group’s biggest investments, Didi sped up its public listing plans as its business bounced back after the epidemic ebbed back home in China. As per a recent Bloomberg News report, the travel service provider has been thinking about pursuing a $70-$100 billion valuation in its IPO.
As per people close to the matter, it continues to trade at a secondary market valuation of around $95 billion. It has been the case over the last few months, they said on the condition of anonymity. The provider last raised money worth $62 billion in the previous year, as per PitchBook’s market data. A Didi spokesperson refused to comment about its valuation.
Softbank Vision Fund, Tencent, and Uber are among the largest Didi shareholders having a joined stake of around 41%, shows the company’s filing. Up to 7% of those shares are in Didi joint-founder Wei Cheng’s name.
SoftBank’s stake of 21.5% is likely to be worth over $15 billion at the target valuation range, even though it could be a diluted stake in the IPO. Bloomberg’s outlet has also reported that the Japanese conglomerate put over $10 billion into Didi.
Didi may have expanded to 15 nations, but most of this company’s revenue emerges from the nation’s mobility business even today. It reported $21.6 billion as its revenue for the previous year. In this year’s first quarter, with China recovering from the epidemic, Didi’s revenue increased more than twofold from 2020 to reach $6.40 billion. It earned a profit for that aforesaid period, as well, having reported $837 million as its net income then.
Two Didi passengers’ murder due to its own drivers three years ago triggered public fury in China, alongside the mass deletion of its application. Didi’s leaders Jean Liu Qing and Cheng described the deaths as fatal safety incidents and their firm’s darkest moment. They informed investors, which are part of the filing, that both happened to its Hitch service users in the summertime. Didi’s leadership felt not just immense sadness but also responsibility, as their company started a phase of profound self-reflection.
Didi mentioned safety concerns in its list of business risks, and said that not ensuring safety could make it lose users. In the application, it also said that it temporarily stopped Hitch for over 12 months to work on procedures to safeguard both drivers and riders following the murders.
Other possible risks for its business are the same as those of its rivals around the globe. Didi’s competitors could undercut its customer rates or even steal drivers through a better potential to earn, said the firm in its application. The business model of Didi would suffer in the event of its drivers being classified again as employees.
It also mentioned the likelihood of antitrust regulations/fines, plus the prospect of its price dropping due to negative sentiment regarding China-based companies in the United States of America.
If it happens, an IPO could complete an astonishing turnaround for an organization that came into conflict with regulators before facing the epidemic’s repercussions. Didi looks to exploit the same enthusiasm of investors that propelled Kuaishou Technology’s and Coupang’s tech debuts this year.
The IPO of Didi would mark a historically significant year for China-based technology giants’ initial public offerings, as well. Kuaishou raised over $6 billion through a debut in Hong Kong, whereas ByteDance might initiate a listing anytime soon.
Alibaba Group’s employee Cheng founded Didi nine years before. Didi also competed with Uber Technologies in China’s market until Uber left it in 2016 while selling its business there to Didi.
As per the filing, Didi is seeking capital to put into technology, have a bigger presence in certain global markets, and launch new products. It also plans on debuting in Western Europe’s market in 2021, as per a Bloomberg report from February this year. It has made heavy investments in community buying, which is among China’s trendiest e-commerce growth domains.
Didi is still China’s dominant ride-sharing industry player. Therefore, it looks to extend to adjacent arenas, including autonomous driving and EVs, through that industry lead. Didi also plans on listing the company’s American depository shares (ADS) under the ‘DIDI’ symbol. Anyhow, the non-US company has not yet specified on which stock change it would do so.