Robocar Trouble

Image source: Shutterstock

What's going on?

Didi filed to list on the stock market in an initial public offering (IPO) that could value the Chinese ride-hailing giant at $100 billion, and we, for one, welcome our automated overlords.

What does this mean?

Didi which beat out Uber to claim ride-hailing dominance in China emerged from the pandemic with a spring in its step: the company reportedly made $6.4 billion in revenue and $800 million in profit last quarter. Thats encouraged it to bring its IPO forward, in hopes of stepping up its push to make robotaxis a reality.

According to Bloomberg, the IPO could value Didi at between $70 and $100 billion up from the $62 billion it fetched in a private funding round last year (tweet this). Thatd be a huge windfall for SoftBank, Tencent, and, yep, Uber, which collectively own more than 40% of the company.

Why should I care?

For markets: Ride-hailing comes a full circle.
Uber owns 13% of Didi after having sold its Chinese ride-hailing business to the company in 2016. But of the two, Didi might be better value. It made almost $22 billion in revenue last year and a $1.6 billion loss, and even the highest mooted IPO valuation would only represent around 5x last years sales. Compare that to Uber, which is trading at around 8x last years sales even after losing almost four times as much money as Didi.

The bigger picture: The best is yet to come.
Didis wont be the only barnstorming IPO this year: trading platform Robinhood which has been riding the wave of meme stocks and stimulus check-boosted bank balances is rumored to be targeting a $40 billion valuation in its own summer debut. In fact, its expected to be a blockbuster season overall: some analysts are estimating that US-listed IPOs could raise upward of $40 billion from June to August a figure thatd eclipse last years record-setting $32 billion for the same period.

Originally posted as part of the Finimize daily email.

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