The crashing DiDi stock price

DiDi is a relatively new ride-sharing business that operates predominantly within China. It’s often been dubbed the ‘Uber of China’, which is actually quite accurate given that it has an 80% market share within that region. Globally, it offers its services to over 500m people. That certainly sounds promising to me. So why did the DiDi price crash last week?

It seems that Chinese regulators are pretty unhappy with the company. The Central Cyberspace Affairs Commission (CCAC) has accused the business of illegally collecting user data and has since initiated an investigation into its cybersecurity practices. Until this investigation is complete, the company has been banned from adding new users to its platform. And the ride-sharing app has been removed from app stores as a consequence. Needless to say, this is terrible news for the company and investors.

However, I’m not entirely surprised this happened. The CCAC advised DiDi to postpone its US IPO until a thorough self-examination was completed. But the IPO went ahead anyway, with a simple note in the prospectus stating, “We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results”.  

What’s next for the business?

This regulatory investigation could be merely a short-term problem (albeit an expensive one). Assuming that the company can overcome this hurdle, what does the future look like for the DiDi stock price?

It might actually be quite explosive. According to the management team, by 2040, the total addressable market size for the business could be as large as $16.4trn. That’s a staggering amount of room to grow. And with its international operations outside of China starting to ramp up, the company seems to be on the right path to tapping this opportunity.

But what I find to be most exciting is its investments in autonomous driving. Didi has partnered with Volvo to help develop its fleet of self-driving cars. The technology is called Gemini. It uses an array of sensors such as lidars, radars, cameras, infrared imaging, and 5G communication networks. Suppose this technology receives regulatory approval in the future. In that case, I would expect a massive surge in profitability as drivers are eliminated from the business model. Consequently, I think the DiDi stock price could surge.

The bottom line

The recent drop in the share price may present a fantastic buying opportunity. But it’s not one I’m interested in. Being investigated by regulators is a serious red flag in my experience. Suppose the company is found guilty of illegal data gathering or is found to have cybersecurity flaws. In that case, beyond the legal penalties, I think it’s pretty likely that users will flock to a different platform to protect their privacy.

Therefore, I’ll be waiting to see the results of the CCAC’s investigation before making any investment decision. In other words, DiDi is staying on my watchlist for now.

The post What’s going on with the DiDi stock price? appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Naturally, an IPO of this size is creating a lot of hype, particularly in the US where it will be listed. But do I think UK investors should consider the stock for their portfolios? Here’s a look at the investment case.

Uber: a closer look 

One of the first things to understand about Uber is that the company is a lot more than just a taxi business. When you consider what the company has already achieved in the space of just a decade, and examine what it plans to achieve in the years ahead, it becomes clear that this is a disruptive technology firm with serious growth ambitions.

Already, Uber has revolutionised the way we get around. For example, only a decade ago, if you wanted to catch a cab in London you were basically forced to choose between hailing an expensive black cab or booking a minicab. However, Uber changed that by enabling smartphone users to hail a ride through their phones. And now, it gives us a broad range of transport options such as Uber Pool, which allows us to ride-share with others for way less than the price of a regular taxi. Uber hasn’t just changed the taxi industry – it’s literally taken a sledgehammer to it. Today, it operates in over 700 cities worldwide and completes 15m trips each day.

Huge growth potential 

This could be just the beginning for Uber though. Take a closer look at the company and you’ll see that it has been diversifying its business model significantly in recent years. Today, it is focusing on:

• Fast food delivery: Uber Eats is the fastest-growing segment of the business and looks set for big growth going forward. 

• Freight: It recently launched its trucking service Uber Freight, which could be huge for the group.

• Self-driving cars: It is a key player in the autonomous driving space and is working hard to get its cars on the road in the near future. 

• Alternative forms of transport: It already offers scooters, bikes and even helicopters in some cities and is looking to expand this.

Overall, the firm estimates that its total potential market size could be as large as $12trn (yes trillion) when you combine transport, freight and food delivery. And according to CEO Dara Khosrowshahi, the group isn’t “even one percent done” yet.

No profits

However, while there appears to be huge growth potential, it’s important to understand that the group is not yet profitable. While it generated revenue of $10bn last year, the company made an operating loss of $3bn. To my mind, this makes the investment case more opaque as it’s harder to value the shares properly. Note that since rival Lyft floated recently, its shares have fallen 20%.

Weighing everything up, I see Uber as a speculative long-term technology play. When you consider its ambitions, it definitely looks interesting. But with profits still potentially a long way off, the investment case does look a little risky to me. I’ll watch for now.

The post Uber IPO: A closer look at the investment case appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

Edward Sheldon has no position in any shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.