Yilei Sun/Reuters
- Didi shares fell as much as 11% Friday after China's internet regulator launched a cybersecurity review of the ride-hailing company.
- The Cyberspace Administration of China said the review was aimed at preventing national data security risks.
- The review comes two days after Didi shares began trading on the New York Stock Exchange.
- See more stories on Insider's business page.
Didi shares sharply dropped Friday after the Chinese government announced a cybersecurity review of the ride-sharing service, delivering that regulatory blow two days after the company made its trading debut in the US.
The Cyberspace Administration of China, the country's internet regulator, said it has stopped Didi from registering new users as it conducts its review, according to multiple reports Friday. The regulator said it launched the move in an effort to prevent national data security risks, maintain national security, and protect the public interest, according to a translation of the notice.
NYSE-listed shares of Didi fell as much as 11% to $14.60 then pared the loss to 6.5%. Didi on Wednesday marked the largest IPO for a Chinese company in the US market since 2014, when shares of e-commerce company Alibaba began trading on the New York Stock Exchange. Didi shares soared as much as 28% on their first day of trading, valuing the company at $86 billion.
Chinese regulators recently flexed their muscle against fintech firm Ant Group which had been working to go public in the US later this year. Late last year, regulators suddenly unveiled new regulations on online lending, throwing a hit to Ant's lending and credit business. The move came a week after Ant's founder Jack Ma made comments that publicly snubbed China's regulatory banking rules. The IPO, which had a reported estimated valuation close to $300 billion, was suspended.
Didi in a statement Friday, according to the South China Morning Post newspaper, said it plans to conduct a comprehensive examination of cybersecurity risks and work to improve its cybersecurity systems and technology capacities.
"Didi will fully cooperate with the relevant government authority during the review," according to the statement.
Didi stock was trading at $15.33, down 6.49%, as of 11:41 a.m. ET on Friday.