BEIJING -- Didi Global, China's largest ride-hailing operator, closed 11% higher in New York Thursday on a U.S. media report that it is considering delisting from the New York Stock Exchange barely a month after its IPO as Chinese regulators turn up the pressure on the company.
The Wall Street Journal said a tender offer for Didi's publicly traded shares is among the options on the table amid "discussions with bankers, regulators and key investors about how it could resolve some of the problems that emerged" after the June 30 initial public offering.
Didi on social media called the rumors "untrue" and said it is "actively and fully cooperating with the cybersecurity review."
Didi stock opened 18% higher on the news and then retrenched in morning trading before climbing to close at $9.86 per share.
Beijing is investigating Didi over national-security and cybersecurity concerns as authorities are believed to be worried about information kept by the company being leaked to the U.S.
Chinese authorities launched their investigation on July 2, days after the IPO, ordering app stores to stop offering Didi's mobile app a few days later.
News of the investigation caused Didi shares to fall to as low as $7.16, down nearly 50% from its $14 opening price.
Didi possesses not only personal data on individual users' travel history but also broader data on regional traffic patterns that can paint a detailed picture of economic activity or point to locations related to national security.
Authorities had expressed misgivings about letting Didi list in the U.S. But with SoftBank Group and other foreign shareholders owning large stakes, the company reportedly forged ahead. It has been suggested that Didi misread Beijing's level of concern about the plan, leading to the crackdown this month.
Seven national regulatory agencies -- the Cyberspace Administration of China, the State Administration for Market Regulation, the Ministry of Public Security, the Ministry of State Security, the Ministry of Transport, the Ministry of Natural Resources and the State Taxation Administration -- conducted an on-site inspection of Didi's offices on July 16, an investigation of unprecedented scale that could be intended to push Didi to take more drastic action.
Some analysts say a tender offer could be priced around $14 per share, at the upper end of its price range for the IPO.
Jay Ritter, a finance professor at the University of Florida specializing in IPOs, does not recall a case of a company going private so soon after an IPO, let alone one as successful as Didi's. But Ritter describes Didi's situation as unique and believes going private may be the most rational decision for the company.
"Being public in the U.S. is having a significant negative effect on the company's regulatory situation in China, where by ending the U.S. listing, it might create value for the company," he said.
It is not uncommon for share prices to surge after news of a possible tender offer, Ritter says, and in Didi's case the company may be willing to buy back its shares at the offer price to mitigate the lawsuits it now faces.
These calculations amount to a sort of crisis triage for Didi, says Leland Miller, CEO of China Beige Book, an economic and data company that advises institutional investors on China. But going private hardly puts an end to its position in Beijing's regulatory crosshairs.
For the time being, the company's executive decision-making will happen through the lens of not making its situation worse with the Chinese government.
"Right now the board of Didi is the Chinese Communist Party," Miller said.
The threat of Beijing pressuring Chinese companies listed in the U.S. to go private could be one of China's biggest sources of leverage in the fight over how these companies are regulated on American exchanges.
The prospect of taking companies private could encourage Wall Street to lobby Washington for regulatory policies on Chinese companies that are more moderate, according to Miller.
"We're going to be looking at a situation where these companies are pawns," he said.
Additional reporting by Jack Stone Truitt in New York.