Investors in the Chinese ride-hailing giant Have I got (OTCMKTS:DIY) the stock has taken a beating lately. Since the company’s peak of over $18 following its initial public offering (IPO), DIDI shares have since fallen to around $2 per share in recent sessions.
That said, that’s not necessarily the news investors are focusing on right now. (After all, most stocks are down in this market).
It is rather the re-registration DIDI shares under the name of DIDIY on the over-the-counter exchange which has investors watching this foreign company. Previously listed on the NYSE, this OTC move and an OTC/Hong Kong listing removes much of the delisting discussion around this Chinese stock. In many ways, investors seem relieved by Didi’s decision to preemptively delist. This avoids what would likely have been a forced delisting by regulators.
Now, regulatory risks and delisting issues are among the various problems Chinese companies listed in the US have faced in recent years. Let’s dive into what investors might want to watch with Didi, as this company seeks to ride out this headwind.
Time to buy DIDIY shares as they are removed from the NYSE?
This decision to delist from the NYSE appears to solve many of the company’s problems. Didi’s initial listing in the United States angered regulators in Beijing, who sought to keep capital in the Chinese market. U.S. regulators pushing for more oversight have also been wary of Chinese companies listed on domestic stock exchanges. Thus, this “voluntary” disbursement appeases all parties on both sides of the ocean.
This does not mean that the trials and tribulations of this endeavor are over. Chinese companies are still dependent on a rather volatile regulatory environment in China. Chinese regulators have shown a willingness to crack down on the profitability of the tech sector, which is bad for investors.
Additionally, the Chinese lockdowns and slowing global economy paint a difficult picture for Didi and his peers. Until those clouds of uncertainty are lifted, it’s hard to argue that Didi’s stock is poised to rise from here.
Of course, at these lower prices, the risk-reward ratio with Didi seems to be much better. Now might be the time to buy. That said, this stock market seems to err on the side of caution. So, it’s a savvy buyer’s market right now.
As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.