Shares of DiDi Global (DIDI 1.09%) fell 19.5% on Tuesday after the Chinese government announced that the ride-hailing company would need to cease new user registrations while regulators conducted a cybersecurity review of its popular app.
The news came late on Friday ahead of the holiday weekend. With the U.S. stock markets closed on Monday in observance of Independence Day, investors were forced to wait until Tuesday before they could take action. Many shareholders responded by selling their shares today.
The regulatory announcement came just days after DiDi's initial public offering (IPO) on Wednesday, June 30. Its stock price closed at $14.14 that day, which was close to its offering price of $14. That placed DiDi's market capitalization at roughly $68 billion, making it one of the biggest IPOs of the past decade.
Chinese regulators recommended that DiDi delay its IPO and complete a check of its network security, according to The Wall Street Journal. Yet it reportedly wasn't a formal order, and DiDi apparently decided to push forward with its stock offering. The company raised approximately $4.4 billion from the share sale.
China's Cyberspace Administration is reportedly concerned that the increased disclosures required for listing its shares on U.S. exchanges will place DiDi's user data at risk. The company has more than 493 million annual active users on its platform.
It's unclear what China will require from DiDi before it allows the company to sign up new users again. This uncertainty is likely to weigh on the recent IPO's shares until the situation is resolved.