Days after DiDi Global’s (DIDI) initial public offering, the company disclosed that China would block downloading of its app in the store. With users who do not have the ride-hailing app on a smartphone, DiDi cannot grow.
Selling in DIDI stock sent Alibaba BABA stock to below $200 last week. Since Alibaba is the bell-weather of Chinese stocks, investors want to know when the sell-off will end. Does it depend on DIDI stock stabilizing?
Beijing ordered DiDi to remove its app from app stores because of DiDi’s serious usage of customer personal information. Investors who bought DIDI stock after the IPO will lose plenty of money. A rebound is unlikely for at least a few months.
Fortunately, the market participants have a forgetful memory. They will forget that China may add any harsh rules at any time to weaken a company’s prospects. The more DIDI stock falls, the more that speculators will bet on a reversal.
Watch for sentiment to reverse. Bullish buying volume will help the stock. As long as the sell-offs follow with buying, the stock will start to find support. DiDi will eventually comply with China’s rules. When it does, the user base may resume its strong growth.
