What happened
Shares of DiDi Global (DIDI 2.33%), a China-based ride-sharing company, fell again today on worries that the Chinese government could significantly penalize the company for its recent U.S. IPO.
The tech stock was down by 18.8% as of 11:51 a.m. EDT.
So what
Bloomberg News reported yesterday that the Chinese government was considering "unprecedented" penalties against DiDi. Those penalties may include anything from a fine to suspension of its operations, or even delisting.
Image source: Getty Images.
The Cyberspace Administration of China pushed back on DiDi going public, but DiDi went through with it anyway, causing the Chinese government to view the IPO as a threat to its authority, according to the report.
Last week the Chinese government told the ride-hailing company that it couldn't sign up any new customers and removed DiDi's app from Chinese app stores.
China is cracking down on some of its technology companies and recently imposed a massive $2.8 billion fine on the e-commerce company Alibaba. Some sources told Bloomberg that DiDi's fine could be even bigger.
This is the second day in a row that DiDi's stock has fallen on this news. Yesterday the stock fell 11%.
Now what
Investors are right to be concerned about DiDi's stock right now. The Chinese government has a lot of authority over companies based in the country, and the company's business is certainly being affected by the government's decisions right now.
And with the potential threat of a massive fine, as well as the threat of being delisted, investors should be very cautious about investing in DiDi right now.
