Didi'S "Light Speed" Listing: 500 Million Users Support The New Business Realization Mode And Lock In The Growth Space

Didi, which has been established for nine years without ceremony and bell ringing, completed its listing in a low-key manner.

On the evening of June 30, Beijing time, Didi officially landed on the NYSE with the stock code of "didi". On the first day of listing, Didi's on-site auction lasted for more than three hours, until about 0.47 a.m. on July 1, Didi opened at 18 US dollars / ads, up 28.5% from the issue price of $14, and its market value once exceeded $80 billion.

Since then, Didi's share price has fallen all the way to close at $14.14, up 1%, with a market value of nearly $67.8 billion. However, this did not affect Didi's becoming the largest U.S. stock IPO this year. It is also the second largest IPO of China capital stock after Alibaba in 2014.

After the closing of the first day, FTSE Russell announced that didi ads would be included in FTSE Russell global stock index, FTSE Russell global large stock index and FTSE Russell emerging market index. Mingsheng company also announced that didi ADR would be added to MSCI China whole stock index with effective dates of July 8 and July 15, respectively.

In the face of listing, most companies will celebrate with high-profile joy, but Didi's interior hardly shows too much excitement“ Didi has experienced ups and downs in its development so far, "said a person from Didi's aspect when reviewing its IPO on July 1." maybe outsiders pay more attention to our financing amount and market share, and see our aura, but in fact, we have been growing step by step in a cautious and practical way. "

As of 19:00 Beijing time on July 1, Didi rose 7.21% to $15.16.

Low key "light speed" on the market

Since the angel round financing in 2012, Didi has completed nearly 20 rounds of financing, becoming the company with the largest number of financing times in China.

Didi was founded out of the founder Cheng Wei's simple desire to alleviate the pain of taking a taxi. Since then, Liu Qing's joining also stems from similar reasons. Since then, with the support of capital, Didi's business territory is expanding day by day. As of March 2021, Didi has been operating in more than 4000 cities and towns in 15 countries including China, providing online car hailing, taxi, free ride, bike sharing, motorcycle sharing, Valet driving, vehicle service, freight transportation, finance and automatic driving.

Business expansion is rapid, but Didi's growth is not smooth. Two passenger safety incidents in 2018 pushed didi to the top of the storm. In the prospectus, Cheng Wei and Liu Qing also said frankly in their letters to investors that 2018 could be described as a dark moment.

Since then, Didi has focused on building a safety protection system. In 2019, Didi put forward "safety is the technology of Didi's development, without safety, everything will return to zero" in the next three years' strategic objectives.

Put all efforts into the safety of Didi, no longer holding the pride of technology halo, obviously lowered the posture. As the darling of capital, Didi even this listing is quite low-key“ Thank you for your attention and concern (for Didi's listing), but we still want to continue to do a good service. " The aforementioned didi people told reporters.

It is not only low-key, but also intensive. From the formal submission of the prospectus on June 11 to the completion of the listing on June 30, Didi's listing pace can be described as "light speed".

And in the preparation for listing, investors are still chasing Didi. At 5:00 p.m. Eastern time on June 28, Didi finished the offering one day ahead of schedule. A person close to didi disclosed that since the submission of the prospectus, Didi has received 10 times over subscription, that is, it has obtained more than 40 billion US dollars of orders, and has fulfilled the original planned fund-raising target of $4 billion ahead of schedule.

At the same time, Didi's IPO price is set at $14, which is at the upper limit of the issuance range of $13-14 / ads. Didi issued 317 million ads shares, 10% more than the original plan of 288 million shares. At $14, Didi raised at least $4.4 billion.

"According to the new valuation of more than 60 billion, get new shares is big meat stocks." Previously, some investors told reporters of the 21st century economic report. Another former investment bank analyst pointed out that it is not too much to give didi a valuation of 100 billion US dollars based on 4 times market value / sales ratio.

Therefore, it is no wonder that on the day of listing, many investors expressed their concern to Didi, "I feel that Didi's pricing is relatively low, and there should be room for growth after that."

The future of Didi

Didi's prospectus is not impeccable.

According to the prospectus, from 2018 to 2020, the annual income of didi travel was 135.288 billion yuan, 154.786 billion yuan and 141.736 billion yuan, respectively. In the first quarter of 2021, Didi's travel income was 42.163 billion yuan. Due to the impact of the epidemic, the income growth of didi has fluctuated in the past three years.

In terms of profit, Didi travel has been operating at a loss in the past three years. According to the prospectus, Didi had operating losses of 12.443 billion yuan, 8.013 billion yuan and 13.788 billion yuan in 2018, 2019 and 2020, and 6.654 billion yuan in the first quarter of this year.

Some industry senior personage analyzed to the reporter of 21st century economic report that Didi's income growth and operation loss expansion constitute the risk points in this prospectus.

But what is the future of didi? In the prospectus, Didi summarized its business layout as "four core strategic sectors", "three major businesses" and "double flying wheels".

Among them, the "four core strategic plates" defined by didi to build the future of travel are shared travel platform, vehicle service network, electric vehicle and automatic driving. The "three major businesses" represent Didi's revenue composition, which are China's travel business (China's online car hailing, taxi, Valet driving and free riding), international business (International Travel and takeaway business) and other businesses (bike sharing and motorcycle sharing, car service, freight transportation, automatic driving and financial services, etc.).

In contrast, "double flywheels" are more focused on business models. With the continuous growth of the overall shared travel market, Didi's shared travel, car service and electric vehicle network have created a double flywheel effect, which benefits drivers, passengers and platforms.

For the purpose of the fund-raising, Didi disclosed in its prospectus that it plans to use about 30% of the fund-raising amount to expand its business in the international market outside China; About 30% of the fund-raising amount is used to improve technical capabilities including shared travel, electric vehicles and autonomous driving; About 20% is used to launch new products and expand existing product categories to continuously improve the user experience; The rest may be used for working capital requirements and potential strategic investment.

"Didi, as a high-frequency rigid demand product with nearly 500 million users, the commercial realization mode it can extend is still a large space for growth." Zhang Yi, CEO of AI media consulting, commented to reporters of the 21st century economic report.

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