Chinese ride-hailing company Didi Chuxing has filed for an initial public offering (IPO) in the US, says Bloomberg. It was always expected to list at some stage, but the end of Covid-19 has prompted the company to accelerate its plans. It wants to raise some cash to help pay for its continued expansion and hopes to achieve a valuation of $70bn-$100bn.
At first glance, Didi’s hope of a $100bn valuation “does not seem too far-fetched”, says Lex in the Financial Times. It would value the company at around five times 2020 revenues, lower than the eight times Uber and Lyft command.
However, this is “misleading”, since Didi uses gross revenue figures, without deducting drivers’ salaries, which is how Uber and Lyft calculate their revenue. Adjusting Didi’s figures to take this into account means that the stock trades at 19 times sales. With ride-hailing still a “cut-throat” business in China, and “regulatory risks at home and abroad”, investors face having to “endure a steeper fare if they want to go along for the ride”. Still, Didi’s goal of at least a $70bn valuation is not unrealistic given that its IPO is “highly anticipated” and the IPO market is set to be “scorching hot” this summer, says Corrie Driebusch in the Wall Street Journal.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Fund managers, venture capitalists and bankers have said that sentiment around tech companies is “even crazier than during the dotcom boom of the late 1990s”. Indeed, with other companies, including investment platform Robinhood, also set to hit the markets next month, things are “busier than they have been in decades at this time of year”.
-
Gold’s allure and why you should never 'pay a premium for graded coins'It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
-
A rebound in UK's commercial property – should you invest?UK commercial property's three-year bear market finally appears to be over, says Max King
-
Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
'Ignore the gloom: US stocks are a buy'Opinion The consensus says the age of American exceptionalism is over. But that is not the way to bet, says Max King
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
