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Is DIDI Stock a Solid Long Term Investment?


It's unfortunate that things have become so financially unstable around the world as they have. It seems like everyday, you turn on the news to hear that practically everything is increasing in price yet again. There's no doubt about it, it's been a difficult few years for the average consumer. First it was a global pandemic, then there was a global supply shortage, now it's war in Ukraine. A lot of this has people wondering if there will ever come a time when there isn't some event that people are using as a reason to increase prices to the point that the average individual struggles to afford basic things like heating, cooling and groceries. When you start talking about gas prices, you're bringing something entirely new into the equation and it's enough to make most people worried for their financial future. As such, many people are looking to start investing in long-term investments as part of their stock market portfolio, all in hopes of leveling the playing field and regaining some of the money that they've already lost. The question is, where are you supposed to start? Surprisingly, some people are looking at Didi Global, a Chinese ride-hailing company that is currently traded on the stock market as DIDI.

About the Company

If you look at the figures for the company, you'll see straight away that their stock is currently selling for next to nothing. As a matter of fact, it's currently selling for only $3.49 per share. That's something that gets a lot of investors interested because they realize that they could potentially buy several shares of stock without spending a great deal of money in the process. Some people have expressed interest in the stock because they are a ride-hailing company, meaning that they're involved in a business that's constantly growing these days. It's also worth noting that they're based in Beijing, a place where ride-hailing is extremely popular. The fact that they're called Didi Global would make most people assume that they intend to do exactly that with their business, grow it on a global scale. One would think that a company based in Beijing who has this type of experience would be able to grow a ride-hailing business practically anywhere, even in certain areas of the United States where this form of transportation hasn't become nearly as popular. Still others know that the company currently has over 15,000 employees. One would think that a company that employs so many people would be financially stable. The logic is that it would be practically impossible for them to employ so many people if they were struggling with their own finances to the point where they find themselves on a rather shaky foundation. The truth is, all of this sounds good at first, but if you look at the price of shares for today's trading, you'll also notice that the stock is down by 7.67% over the previous 24 hours. That's a rather large drop in a 24-hour time span and it is something that would give most people enough cause for concern to stop and look at things a little more closely. Truth be told, the company isn't nearly as financially stable as they might appear to be at first glance. If you're really interested in knowing whether or not you should consider them as a long-term investment, you'll have to turn to various stock market analysts in order to understand everything that's going on with the company. The fact is, it would be foolish to invest in this or any other company without doing so well in advance.

Past Performance

Of course, one of the first things you’ll want to do is look at the past performance of the stock. When you look at this particular stock, you're probably going to be alarmed when you do so. Over the course of the last year, they have been the subject of immense regulatory pressure from the United States government. This has caused the growth of the business to first stall and then practically go into reverse. As a matter of fact, they had one of the worst IPO performances of any company listed on the stock market over the course of the last year. It's been so bad that there has been a great deal of talk about the company being delisted from the stock market. The thing that is so confusing is that they would probably be able to make a small fortune if they managed to somehow get past all of these regulations that are currently limiting them from doing much of anything. The problem is, it remains to be seen whether or not that will ever become a reality. Unfortunately, there's a better than average chance that these regulatory issues are going to spell doom for the company, at least in the United States. Officials at the company have even started to seriously consider removing themselves from both the stock market and the United States in its entirety in order to focus on operations in Hong Kong where they don't have to deal with all of these regulatory issues. This is being considered as a move to save the company because there is fear that if they remain in the United States to deal with all of these issues, the entire company will eventually go bankrupt. The problem stems from loads of regulatory and safety issues that must be addressed in the United States that aren't regulated as strictly in other countries. A lot of it also has to do with business laws and even emissions control laws for the vehicles that are being operated, things that the company didn't necessarily count on having to deal with in this magnitude. The end result is that you have a company that knows how to make money, but isn't nearly as skilled at navigating the different government regulations for various countries. Right now there's a great deal of debate regarding whether or not they should continue to try to make things work or just get out of the game entirely as far as their US-based operations are concerned. If they do, there will be no stock to speak of, at least not on Wall Street.

More Questions Than Answers

Right now, there are obviously more questions than answers. Most stock market analysts seem to be on the fence about this particular stock and that's something that surprises a number of investors because the situation looks so grim. Perhaps a number of analysts are being overly optimistic, but more than a few of them believe that the company will somehow find a way to turn things around. If they do, then there is a real possibility that they could see an appreciable level of success which would allow their stock to climb. If that's the way things work out, it is conceivable that people could invest in the stock at today's prices, buying up several shares for next to nothing. Once the company gets past all of their regulatory issues and the stock starts going up, it would then be possible to sell these shares for a lot more money than what was ever initially paid for them. The thing is, there is a genuine amount of risk involved here. Granted, investing in the stock market is risky to begin with. That being said, it's not usually this risky. There is a better than average chance that the company isn't going to get past the regulatory issues and will continue to see their stock tumble until they're delisted. The more pressing issue is that anyone who had previously purchased the stock and not managed to sell off their shares is simply out the money that was required to make those purchases. It seems odd that anyone who wants to make one purchase for a long-term stock market investment would even consider something that may not even be in existence within the next three to six months. The whole point about investing in the stock market is to take calculated risks that either will likely go in one's favor or will provide a massive payoff in exchange for accepting a fairly massive amount of risk. Neither one of those scenarios is true here. Things definitely don't look like they're going to go in the company's favor, meaning they're not likely to go in the investors favor, either. By the same token, it's highly unlikely that the payoff would be significant enough to warrant taking this type of risk. In fact, many people are of the opinion that investing in this stock would be similar to literally burning your money in a fire. Despite the fact that some stock market analysts are hoping to see this particular stock turn around, there's just not a lot of evidence that suggests it will actually do so.

Making Sense of it All

What are you supposed to do if you're looking for a solid long-term investment and this stock is still on your radar? If you're truly set on purchasing shares of the stock, you might be able to find some hope in the fact that certain stock market analysts believe that the company has gotten off to one of the shakiest starts in history, yet they also have the capability to find their footing and start making some money. On the other hand, it's entirely possible that they're not going to find their footing in any capacity. When you are trying to make sense of it, one of the things that you'll probably do first and foremost involves looking at the numbers. In addition to looking at the amount of money required to purchase a single share of the stock at today's prices, it's important to look at how the stock has performed in the last 30 days. In this particular case, it has lost about 50% of its value. There have also been some wide swings in the stock's value within the last seven days, as it has regained roughly 20% of its value in the last week, only to turn around and fall another 7% in the last 24 hours (as previously mentioned). Perhaps the only thing that you can tell with any level of certainty about the stock is that it is about as volatile as any stock could ever get.

At the moment, they're simply doesn't seem to be any clear indication regarding how things will eventually play out with this particular stock. Perhaps the scariest thing is that the overwhelming majority of it revolves around their ability to get past the aforementioned regulatory issues. Until they do get past these issues, it's highly unlikely that anything is going to change. In fact, the stock market is merely reflecting the level of uncertainty that people are feeling with regard to this particular stock. Since that uncertainty is occurring as a direct result of their inability to successfully deal with these issues in a timely manner, one would have to assume that the uncertainty will continue. That means that it's highly likely that the stock will continue to fluctuate and more than likely, to tumble. If you're looking for a successful long-term investment, it doesn't make a lot of sense why you would continue to consider this particular stock when there are others out there that are far more capable of providing you with the potential for success. At a time when the stock market is more volatile than usual, the idea is to pick those stocks that present less risk, especially where long-term investments are concerned. Unfortunately, Didi Global just doesn't fit that criteria at this particular point in time. More importantly, there is no guarantee that they ever will.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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