Didi Chuxing: Didi Removes Its App from App Stores Over Privacy Concerns

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Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

The Cyberspace Administration of China (CAC) ordered app stores in China to remove Didi's app for the illegal collection and use of personal data.  This comes after the CAC announcing a cybersecurity review of Didi.   The regulatory investigations are not just limited to Didi.  The CAC also opened a cybersecurity probe into the recent US-listed Chinese online recruiter Boss Zhipin and subsidiaries of Full Truck Alliance (both backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> ). The removal of the Didi app from app stores is concerning as this could have a direct impact on new user and driver acquisitions, and thus impacting its revenue, which is a key driver for the company's valuation.  Didi's China Mobility business had 337 million annual active users (AAU) and 156 monthly active users (MAU) generating 25 million average daily transactions at the March quarter. I am cautious on Didi because of its rich valuation, risks related to its bike-sharing business, and regulatory and business risks.  Please see my last insight, <a href="https://www.smartkarma.com/insights/didi-chuxing-didi-us-avoid-buyers-remorse-do-an-apples-to-apples-comparison" target="_blank" data-smartkarma-citation="insights:53823" rel="noopener">Didi Chuxing (DIDI US): Avoid Buyers' Remorse - Do an Apples to Apples Comparison,</a> for discussions on valuations.

The Cyberspace Administration of China (CAC) ordered app stores in China to remove Didi's app for the illegal collection and use of personal data.  This comes after the CAC announcing a cybersecurity review of Didi.   The regulatory investigations are not just limited to Didi.  The CAC also opened a cybersecurity probe into the recent US-listed Chinese online recruiter Boss Zhipin and subsidiaries of Full Truck Alliance (both backed by Tencent (700 HK) ). The removal of the Didi app from app stores is concerning as this could have a direct impact on new user and driver acquisitions, and thus impacting its revenue, which is a key driver for the company's valuation.  Didi's China Mobility business had 337 million annual active users (AAU) and 156 monthly active users (MAU) generating 25 million average daily transactions at the March quarter. I am cautious on Didi because of its rich valuation, risks related to its bike-sharing business, and regulatory and business risks.  Please see my last insight, Didi Chuxing (DIDI US): Avoid Buyers' Remorse - Do an Apples to Apples Comparison, for discussions on valuations. 

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