Didi Global (DIDI) shares plunged in pre-market trading Tuesday as investors reacted to a weekend move by authorities in China to remove the ride-sharing group from mobile app stores.
Sunday's edict from the Cyberspace Administration of China (CAC) followed a move last week to stop new user registrations as it investigates alleged "national data security risks" that it said were linked to "maintain national security protection and protect the public interest."
The Wall Street Journal reported that Didi was given notice of the investigation prior to its $4.4 billion IPO on the New York Stock Exchange last week, although the company told Reuters it had no knowledge of the CAC's intention's before the announcements made on July 2 and July 4.
"Once the 'DiDi Chuxing' app is taken down from app stores in China, the app can no longer be downloaded in China, although existing users who had previously downloaded and installed the app on their phones prior to the takedown may continue using it," Didi said in a statement posted on its website. "The Company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users' privacy and data security, and continue to provide secure and convenient services to its users."
"The Company expects that the app takedown may have an adverse impact on its revenue in China," Didi added.
Didi shares were marked 22.5% lower in pre-market trading Tuesday to indicate an opening bell price of $12.03 each.
Didi, which had more than double the revenues of Uber Technologies (UBER) last year, and plans to have 800 million monthly active users by 2022, ended its first day of trading at just over $14 per share -- its IPO price -- following the biggest listing for a China based company in seven years on Wednesday.
Didi raised $4.4 billion through the sale of 317 million ADRs in its much-anticipated offering, around 30 million more than originally planned, with shares trading as high as $18 each during the listing's early peak.
Asia-based tech giants SoftBank (SFTBY) , Tencent (TCEHY) and Alibaba (BABA) are among Didi's main backers, while the company itself if formally known as Xiaoju Kuaizhi Inc. Uber, which was essentially forced out of the China market after it failed to take on Didi's meteoric rise, took a stake in the group in 2016 when it merged its unit with its Beijing based rival.