China’s DiDi Bans Employees From Selling Company Shares Indefinitely
Didi, the operator of China's largest ride-hailing app, recently prohibited current and former employees from selling its shares indefinitely.
People familiar with the matter said that the share-selling prohibition Didi imposed was supposed to end on 27 December 2021, when the 180-day lock-up period the company was placed under ended due to its initial public offering (IPO) in the New York Stock Exchange (NYSE). However, the prohibition was extended without a new end date set.
As a result, both current and former employees will be unable to sell company shares until Didi is listed in the Hong Kong Exchanges (HKEX), the sources said. It also caused the company to lose about US38 billion in stock market capitalisation since its US$4.4 billion IPO under the NYSE.
Li Chengdong, head of the e-commerce think-tank, Haitun, said that some of Didi's employees might soon leave the company due to them not waiting any longer to sell their shares and that "there are definitely going to be a lot of disappointed people" with what happened.
"If you've grinded for three or four years and now there's no date set for the Hong Kong IPO... probably for some employees they won't want to wait any longer, maybe they will leave," Li Chengdong said.
Didi delisted itself from the NYSE in early December 2021 after careful consideration and Chinese regulators asking it to do so due to concerns about the leakage of sensitive data. It also announced its plans to pursue a listing in the HKEX at that time.
Didi's delisting from the NYSE reflects China's agenda of controlling the country's data - a strategic asset in China's economic and industrial showdown with the U.S., according to China experts.
The company also recently experienced a significant drop in the price of its shares. NASDAQ reported that Didi's shares entered "oversold territory" after its shares hit a relative strength index reading of 29.9 after changing hands as low as US$5.29 per share.
Didi has yet to address the prohibition as of the publication of this article.
Written by John Paul Joaquin