- Shareholders of Chinese ride-hailing company Didi (NYSE:DIDI) voted today to move forward with de-listing plans
- This delisting is not a surprise, but shares of DIDI stock are down nonetheless
- This stock will likely trade over the counter (OTC) mid-June, following a June 2 filing deadline with the U.S. Securities and Exchange Commission (SEC)
Source: DANIEL CONSTANTE / Shutterstock.com
After a high-profile initial public offering (IPO) last year, Didi (NYSE:DIDI) has been on a rather rough trajectory over the past year. Today, DIDI stock has once again turned red, as this stock continued below $1.50 per share. This is quite the decline from the stock’s $18 peak just a year ago.
Today’s move lower appears to be driven by news that shareholders have approved the company’s plan to delist from the New York Stock Exchange. This was followed by a formal notification that the company intends on delisting in short order.
According to various releases by Didi, its final delisting notification will be filed with the SEC on or after June 2. Shares will stop trading 10 days after, meaning mid-June is the rough timeframe for delisting that’s now on the table.
Let’s dive into what this announcement means for Didi shareholders moving forward.
DIDI Stock Down Again on Delisting Progress
As a U.S.-listed Chinese company, Didi has taken a beating by the market lately. In a flight to safety, investors are keenly attempting to avoid risk. Delisting risk for Chinese companies off U.S. exchanges is one of the primary drivers for this sector’s relative underperformance of late.
Accordingly, today’s announcement that Didi will be among the first large-cap Chinese companies to delist is big news. Other companies may follow suit. And while DIDI stock will still be able to trade on the OTC exchange, a loss of liquidity and prominence may be bad for business.
Perhaps this is a buying opportunity for investors bullish on Chinese stocks. After all, a range of other high-profile Chinese tech stocks have chosen to exist on the OTC exchange for a while. That said, pink sheet investments tend to be out of the purview of many institutional managers. Thus, investor enthusiasm for DIDI stock may continue to decline over time.
I think DIDI stock represents an intriguing risk-reward at these levels. As a speculative bet, perhaps there’s something there. Time will tell just how important this delisting event is to the company’s value in the eyes of investors.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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