Ride-hailing has been one of the most divisive sectors on Wall Street ever since Uber and Lyft blasted onto the public sphere a couple of years ago.
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Now, the ‘big two’ could be a ‘big three’ following the public debut of DiDi (NYSE: DIDI) yesterday.
What is DiDi?
In the simplest terms; DiDi is the Uber of China. Founded in 2012, it operates in nearly 4,000 cities, counties, and towns across 16 countries, with an estimated 500 million annual active users.
The ride-hailing business was previously valued at $62 billion in a 2020 funding round and managed to raise a whopping $4 billion in yesterday’s initial public offering — making it one of the biggest IPOs of 2021 so far.
With an IPO price of $14 per share, DiDi opened at $16.65 per share, rising as high as $18.01, before eventually falling to a close of $14.14. This is still a 1% increase on its IPO price, making it a more successful debut than its American counterparts. Both Uber and Lyft closed below the initial trade price in their 2019 debuts.
So what makes DiDi so different?
Well, with a population of over 1.4 billion, its total addressable domestic market alone dwarfs its U.S. rivals. This has helped it achieve impressive revenue growth, which includes the $21.6 billion in 2020 revenue — albeit with a loss of $2.54 billion. However, this compares to Uber’s own 2021 loss of $6.77 billion on revenue of $11.14 billion — almost half what DiDi made in the same period.
With global economies reopening and a fresh IPO in the U.S., DiDi could be poised to enjoy impressive growth across Australasia. However, it’s always best to wait at least a couple of quarters before investing in newly public businesses, as this allows volatility to reduce.
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