Uber’s one-time, $9.4 billion stake in Chinese ride-hailing giant Didi has dwindled by half in less than a month as China escalates its threats to U.S.-listed companies. This week, more than $2 billion of this drop was recorded.
Didi’s American depositary shares, which debuted at $14 a piece in June on the New York Stock Exchange, plunged 21% on Friday to $8.06, after falling 11% a day earlier. On July 1, the second trading day, they had closed at $16.40.
Uber owns about 12% of Didi, making it the second-largest investor behind SoftBank. Uber obtained its stake in 2016 after selling its Chinese business to Didi in exchange for equity in its rival.
Didi’s IPO came with a lot of hype and a market cap of close to $70 billion. But the honeymoon was short-lived, as within days of the offering separate reports surfaced that Chinese officials were conducting a cybersecurity review of the company and that Didi had been advised to postpone its listing and review its network security weeks before it went public.
Chinese regulators were planning to punish Didi. This could include a fine that could be more than the $2.8 billion Alibaba paid earlier in the year following an anti-monopoly probe.
The penalties could include the delisting of U.S. shares or their withdrawal, citing sources familiar with the matter. Chinese legislators have recently announced plans to restrict the ability of domestic companies in order to list abroad.
Uber still shows a profit on its original investment in Didi valued at $2 billion five-years ago. But it is falling fast. At the end of March, Uber valued the stake at $5.9 billion in its quarterly filing. It’s now down to $4.6 Billion as of Friday.