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Uber shares ended the day in negative territory after the company’s stake in Didi fell by $ 2 billion due to regulatory issues in China.
Uber’s stake in Didi decreases massively
Tech company Uber has seen its investment in Chinese rideshare giant Didi drop more than 50% in recent weeks. Uber previously held a $ 9.4 billion stake in Uber. However, investment has plummeted as the Chinese government crackdowns on US-listed companies operating in the country.
Shares of Didi’s US custodian began trading at $ 14 a share in June on the New York Stock Exchange. However, the price has fallen 21% today and is currently trading at $ 8.02. Uber controls 12% of Didi and is the second-largest investor behind SoftBank. Uber bought out Didi’s shares after selling its Chinese operations to the company in 2016.
This latest development led to the drop in Uber’s share price earlier today. Since the start of the year, Uber stock has underperformed. UBER started the year at $ 51 per share, but started declining in May after hitting an annual high of $ 62.
Didi is under fire
Didi has come under pressure from regulators in recent months. Its IPO peaked and its market capitalization reached nearly $ 70 billion. However, he did not last long in the spotlight as Chinese authorities began to conduct a cybersecurity review of Didi. The ridesharing company was then asked to postpone its registration and review the security of its network.
The company faces further difficulties after Bloomberg reported earlier this week that Chinese regulators were working on sanctions against Didi. Regulators could impose a fine that would exceed the record $ 2.8 billion paid by Alibaba earlier this year.
Some of the other touted sanctions would include delisting or withdrawing U.S. stocks, people familiar with the matter told Bloomberg. Regulators in China plan to limit the ability of Chinese companies to register in America and other foreign markets.
This article originally appeared on FX Empire
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