DiDi Global Inc.
DiDi Global Inc. (“DiDi” or the “Company”) purports to be the world’s largest mobility technology platform. The Company claims to be the “go-to brand in China for shared mobility,” offering a range of services including ride hailing, taxi hailing, chauffeur, and hitch.
On or about June 30, 2021, DiDi sold about 316.8 million ADSs in its IPO for $14 per share, raising nearly $4.5 billion in new capital.
On July 2, 2021, the Cyberspace Administration of China (“CAC”) stated that it had launched an investigation into DiDi to protect national security and the public interest. It also reported that it had asked DiDi to stop new user registrations during the course of the investigation.
On this news, the Company’s share price fell $0.87, or approximately 5.3%, to close at $15.53 per share on July 2, 2021, on unusually heavy trading volume.
Then, on Sunday, July 4, 2021, DiDi reported that the CAC ordered smartphone app stores to stop offering the “DiDi Chuxing” app because it “collect[ed] personal information in violation of relevant PRC laws and regulations.” Though users who previously downloaded the app could continue to use it, DiDi stated that “the app takedown may have an adverse impact on its revenue in China.”
On July 5, 2021, The Wall Street Journal reported that the CAC had asked the Company as early as three months prior to the IPO to postpone the offering because of national security concerns and to “conduct a thorough self-examination of its network security.”
On this news, the Company’s stock price fell $3.04 per share, or 19.6%, to close at $12.49 per share on July 6, 2021, on unusually heavy trading volume. By the commencement of this action, the Company’s stock was trading as low as $12.06 per share, a nearly 14% decline from the $14 per share IPO price.
A securities class action has been filed against DiDi on behalf of shareholders that purchased DiDi shares between June 30, 2021 through July 2, 2021. This case has been filed in the U.S. District Court for the Southern District of New York.
The Registration Statement was materially false and misleading and omitted to state material adverse facts. Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that DiDi’s apps did not comply with applicable laws and regulations governing privacy protection and the collection of personal information; (2) that, as a result, the Company was reasonably likely to incur scrutiny from the Cyberspace Administration of China; (3) that the CAC had already warned DiDi to delay its IPO to conduct a self-examination of its network security; (4) that, as a result of the foregoing, DiDi’s apps were reasonably likely to be taken down from app stores in China, which would have an adverse effect on its financial results and operations; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.
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