Didi Chuxing Stock Price Forecast July 2021 – Time to Buy DIDI?
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China-based ride-sharing service Didi Chuxing (NYSE: DIDI) is in the news lately after the company debuted in the market. Following August’s fundraising round, Didi was valued at $62 billion. The first trade on Wednesday is more muted than the $100 billion some had predicted. This has made it one of the largest U.S. IPOs to take place in the last ten years. Quite naturally investors are asking whether Didi Chuxing is a good prospect for investment.
Didi Chuxing – Technical Analysis
If we look at the financial statement for Didi Chuxing, we will find a company with a market cap of nearly $80 billion. DIDI shares began trading on Wednesday at $16.65 per share, which is a 19% increase from their offering price of 14% per share.
Moving over to the technical side, Oscillators for Didi Chuxing such as CCI(14)(127.7065), Ultimate Oscillator(83.382) and others are showing a neutral action. Simple moving averages such as MA5(11.99), MA50(1.20), MA100(0.60) and others are pointing towards buying. DIDI shares closed on June 30th at $14.14.
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Recent Developments
Didi recently got listed on the New York Stock Exchange, which coincides with the increasing demand for ride-hailing services due to falling Covid-19 cases. Didi’s revenue decreased by almost 10% between 2019 and 2020 as the pandemic struck China hard. Before that period, however, the company experienced an 11% revenue growth. Revenue for Didi has bounced back, with reports showing a 107% growth in Q1 from the past years quarter.
Should You Buy DIDI Shares?
Investors have a lot of positive signs for investing in Didi, starting with its market share in China’s shared mobility market at over 80%. The overall market in China is expected to grow at 270% over the next 5 years, with an average growth rate of 29.9%. However, there are risks with DIDI shares as well.
Didi’s operating loss also doubled to over $1 billion in Q1 despite its doubling revenue. While bullish investors might suggest increased sales and marketing expenses as reasons for this loss, bearish investors could take this as a sign of increasing competition. It also has the additional risk of being a Chinese stock in a U.S. stock exchange. The U.S. government has explicitly banned U.S. investors from investing in companies tied to the military of China. This means that Chinese companies like Didi Chuxing will undergo increased scrutiny and transparency rules.
It’s still unclear how ride-hailing platforms will eventually turn profits, especially with increased regulatory concerns. Profits may only come after breakthroughs in autonomous driving. Didi Chuxing is one of those companies which are aiming for the autonomous technology market. However, the payoff is highly uncertain. So investors should stay on the sidelines for now and watch how DIDI shares move. Most importantly they have to be on the lookout for news on how the company executes autonomy and growth initiatives.
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