Is Didi Chuxing Stock A Buy After Its IPO?

A Didi Chuxing IPO is on the way, and the company is targeting a $60 billion valuation at launch.

An official date has not yet been announced, but the company expects to go public sometime in the first half of 2021.

You might only be familiar with Uber Technologies Inc. (Nasdaq: UBER) and Lyft Inc. (Nasdaq: LYFT) when it comes to ride-hailing. But Didi is one of the premier ride-hailing firms in the world.

In fact, Didi Chuxing has a total of 550 million users, operating across Asia, Australia, and Latin America. Compare that to Uber's 75 million.

Still, there is something to be said about recent ride-hailing IPO failures. Both Uber and Lyft tanked after their IPOs, sometimes trading as much as 70% below their IPO prices.

But Didi might have something the other companies don't.

red BMW coupe parked at road

Image Source: Unsplash

Here's whether or not you should buy Didi stock after its IPO.

What's So Great About Didi?

Didi Chuxing is China's top ride-hailing firm. It could also be the top ride-hailing firm in the world after a few years.

The company was founded eight years ago, and it's just begun to see profits in Q2 2021.

Uber has a 17.5% stake in Didi, and Didi made a $1 billion investment in Uber, so you could say Didi is essentially the Chinese Uber. But it's much more than that.

In 2015, Didi merged with a company called Kuaidi to form a smartphone-based transport services giant. Users would hail taxis, privately owned cars, carpool, and catch buses. This is a marked difference from the Uber and Lyft models – beyond cars, they have only scooters.

Didi wanted a U.S. IPO for the prestige of operating alongside big names like Uber and Lyft. There would also be greater capital investment potential. However, the company had to back out due to tension between China and the United States.

In addition, Chinese companies trading on the NYSE are subject to heightened scrutiny and regulation. So, Didi will trade on the Hong Kong exchange.

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