IPO, based on the disappearance of its name from a list of active filings maintained by the New York Stock Exchange.Ĭhinese companies like LinkDoc have always been subject to government policy and regulations that can suddenly be strengthened or changed, or abruptly get enforced after lying dormant for years. Meanwhile in a related development, Daojia, a provider of maids and nannies to Chinese homes, has also just pulled its own recent filing for a U.S. The company could also face an imminent cash crunch and be scrambling to find new investors after losing the money it was aiming to raise from the listing. Now LinkDoc must decide what to do next as it contemplates a year-old requirement for reviews of all companies that operate “critical infrastructure” that may lie at the heart of the cybersecurity regulator’s scrutiny. over the last two weeks, led by ride-hailing behemoth Didi Global Inc and two other freshly listed companies that were singled out for criticism. That scrutiny has rocked shares of Chinese companies in the U.S. Instead, it became the first Chinese company to officially pull the plug on an overseas listing plan – at least temporarily – in the wake of heightened scrutiny by the nation’s cybersecurity regulator. IPO that would have raised $211 million late last week. However, the stock should remain cheap for a very long time.Chinese oncology-focused medical data firm LinkDoc Technology Ltd., which is backed by e-commerce giant Alibaba, was looking forward to marking a major milestone in its relatively short history with a U.S. Should investors still hold their shares of DiDi?ĭiDi's investors might be reluctant to sell their shares at their current reduced prices, since the stock now trades at less than its estimated revenue this year. investors who bought the stock at its IPO price.
If that happens, DiDi might backtrack and try to take itself private at a discount - which would be the worst-case scenario for U.S. If China still has national security concerns about DiDi, then China might reject its bid to relist in Hong Kong and force it to relist its shares on a mainland exchange that foreign investors can't access as easily. There's also the matter of another government intervention. Investors will need to open an account in a brokerage that has access to Hong Kong, transfer over their shares, and then pay for a conversion of their ADRs into Hong Kong shares. brokerages - including Morgan Stanley's E*Trade and Robinhood Markets - don't offer any access to Hong Kong's stock exchange.
In its press release, DiDi claims its ADR shares "will be convertible into freely tradable shares" in Hong Kong after it relists the stock. Instead, they'll probably ask for an exclusive homecoming in Hong Kong before reinstating its apps in China. Since Chinese regulators also believe that national security is an issue for DiDi, they probably won't let it move to an OTC exchange as Luckin did and remain easily accessible to U.S. citizens from holding the Hong Kong-based shares. regulators forced China's top telecom companies to delist their shares amid national security concerns earlier this year, they also forbade them from shifting to OTC exchanges. In addition, other Chinese tech giants, Tencent among them, are still trading their unsponsored American depositary receipts (ADRs) on OTC exchanges. Therefore, moving to an OTC exchange wouldn't necessarily be a death sentence for DiDi's stock. Luckin's stock had dropped below $2 per share at the time after its fabricated sales figures were exposed, but it now trades at about $13. That's what Luckin Coffee ( LKNC.Y 2.93%) did after it was delisted from the Nasdaq last June. A less painful option would be for DiDi to relist its shares on an over-the-counter ( OTC) exchange.