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Didi Shares Tank After Reports of Possible Government Penalties

Didi Global reportedly is looking at potentially serious penalties as an analysts' quiet period is about to end.

Didi Global  (DIDI) - Get DiDi Global Inc. Report tumbled Friday following reports that China’s ride-hailing giant could face potentially "unprecedented" penalties from Chinese regulators following its recent IPO.

Shares of the Beijing company, ADRs of which trade on the NYSE, were down 21.4% to $8.02 in late trade.

The company's volatility may continue on Monday, when a 25-day quiet period expires for U.S.-based analysts at the banks that took it public.

Chinese regulators are considering serious, perhaps unprecedented, penalties for Didi Global after its controversial initial public offering last month, Bloomberg reported Thursday, citing people familiar with the matter.

TheStreet's Jim Cramer has cautioned investors to stay away from Didi and other Chinese stocks due to the potential interference from the country's government. Read more of Cramer's investing insights and trading ideas, including his warnings on Chinese IPOs, on Real Money.

Regulators see Didi's decision to go public, despite pushback from the Cyberspace Administration of China, as a challenge to Beijing’s authority.

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According to the report, regulators are considering a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor. 

A forced delisting or withdrawal of Didi’s U.S. shares are also possible. Deliberations are at a preliminary phase.

Last week, Chinese regulators said they were conducting on-site inspections at the company to investigate data security.

Earlier this month, Didi shares dropped after the Chinese government shut down 25 of its apps. 

Separately, U.S.-listed shares of TAL Education  (TAL) - Get TAL Education Group Sponsored ADR Class A Report dropped sharply Friday as Chinese authorities are considering asking all companies that offer tutoring to go non-profit.

Shares were down nearly 70% late in Friday's session.

The Chinese K-12 tutoring company responded to the reports saying that it has not received any official notification from the People's Republic of China and that the new reported regulations haven't been published.