American investors in Didi and Full Truck Alliance lose over 20% of their investment as Wall Street firms like Goldman Sachs collect their fees selling companies surviving on the whims of China’s Communist Party.
Last Wednesday, Wall Street helped Chinese rideshare company Didi raise billions from American investors in a massive Initial Public Offering (IPO). Didi had originally grown out of its acquisition of Uber in China, after the latter was forced to leave due to stifling regulations.
The Chinese ride-sharing tech company raised $4.4 billion, giving the company a total market value of $68 billion. At first, things looked promising for Didi and the Americans who invested billions in it. CNBC host Jim Cramer advised them to “buy as much as you can,” but didn’t take seriously his own warning that Didi would only do well if it could stay clear of CCP dramas.
The drama began a week later when Chinese regulators spontaneously removed Didi from app stores for failing to comply with Chinese cybersecurity regulations worried about private user data.
In the fallout, Didi’s share price tanked, and investors lost $15 billion almost overnight. Lawsuits have been filed, but there’s only so much that can be done. Chinese companies only have as much control over their operations as the CCP allows them to have.
After multiple back-to-back China IPOs gone wrong, lawmakers in Washington are asking the question: Why was Didi even allowed to IPO in the U.S. in the first place?
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