Source: didi official website
Welcome to the wechat subscription number of “chuangshiji”: sinachungshiji
Source: BT Finance (ID: btcjv1)
Should investors be happy or alert when unicorn, which has the most financing and the most difficult profit, goes public?
At present, Didi has started the listing process in Hong Kong, and one of the sponsors has confirmed Goldman Sachs. According to the exclusive information of BT finance, Didi will release the prospectus and start the roadshow in the third quarter according to the plan. At present, it is still selecting 1-2 investment banks as sponsors, and the communication between the accounting firms responsible for auditing is also in progress, with the target valuation of 60-80 billion US dollars (about 387.7-517 billion yuan).
However, for Didi, who is burning a lot of money but has some difficulties in making profits, many market participants and investors still have doubts about the credibility of the valuation of up to $80 billion and the performance of the stock price after listing.
Looking for other profitable businesses
Since its establishment, Didi has carried out nearly 20 rounds of financing and raised more than 20 billion US dollars. The investors have gathered Alibaba, Tencent investment, Softbank China capital, CDH investment, Sequoia Capital China, highland capital, Jingwei China and other well-known institutions.
Didi’s financing situation over the years
Didi, who has spent money on subsidizing the market to attract customers, has always been in a state of loss. In February 2019, Cheng Wei, the founder of Didi, revealed that the company had never made a profit from 2012 to 2018, with a total loss of 39 billion yuan in six years. Relevant statistics also show that, by the end of 2019, Didi’s accumulated loss in seven years has exceeded 50 billion, including a loss of 11 billion in 2018.
In May 2020, Liu Qing, President of Didi, announced that the company’s core travel business had made some small profits, but he did not disclose more information, and the outside world questioned whether its profits could be sustained.
Some market insiders said: if it had not been for external blood transfusion, Didi would have been closed for a long time.
After the outbreak of the epidemic in 2020, seeing a large number of orders of travel business lost, Didi regained its expansion strategy. On the one hand, it expanded the business scale of Shun windmill, launched the travel brand “huaxiaozhu” (mainly focusing on the third and fourth tier cities), which was nicknamed “pinduoduo in taxi industry”, and upgraded the taxi business to “fast new taxi”.
On the other hand, Didi is eager to find business to make money outside of travel. It mainly uses Uber’s practice of operating freight service for reference to launch delivery service in 21 cities, namely “didi errands” (hatched from Didi’s driving business), and then recruits minibus drivers and truck drivers in 10 cities to enter the already crowded on-demand logistics industry, such as following goods, helping people, fast dogs, etc Direct competition.
In addition, Didi has also taken frequent actions in the fields of driverless driving, tourism (the establishment of Beijing Xiaoju International Travel Agency), community e-commerce, etc., and its business boundary has been constantly extended.
Behind Didi’s frequent actions, it is to strive to increase new revenue, tell new business stories, boost the company’s valuation, and finally complete the amazing leap of listing, so as to achieve rapid blood supply and bring certain returns to the founders, senior executives and investment institutions.
There are bubbles in existing valuations.
For the 600-800 billion valuation of the stock market, many market professionals have expressed a high level of bubble, and gave their own judgment basis.
First, the world is in a big environment of shared bubble burst, and China is no exception. At the end of 2020, Renren car, a used car platform with an estimated value of US $1.4 billion, was sold to 58 cities at a low price of HK $10000, which is an example. As for Didi, because it has never been profitable, coupled with the previous service security problems and the continuous impact of the new crown epidemic on the travel business, some investors deeply doubt its follow-up development, and have caused the transaction price of didi to decline in the private equity market.
In May 2019, Uber’s IPO prospectus disclosed that didi held 15.4% of its shares. Didi’s valuation at that time was US $51.6 billion, 10% less than the valuation of US $56 billion in the last round of financing in 2017. According to latepost, in 2020, a large fund acquired some old shares of the company at a valuation of US $35 billion.
Another reason to judge that the valuation is too high is the competitive environment didi is currently in. Although didi has the largest share in the online car Hailing market, there are more and more competitors, including Dida travel, T3 travel of the newly emerging “national team” of online car Hailing (FAW, Dongfeng and Chang’an), Hexing car Hailing of JAC, Ruqi travel initiated by GAC Tencent, BMW online car hailing, freewheeling business of Gaode map, and SAIC just Just launched the “road travel” and so on, have entered the hinterland of Didi. According to CNNIC, the China Internet Network Information Center, more than 140 domestic car sharing platforms have obtained the right to operate.
In the face of increasingly fierce market competition and various kinds of subsidies war, Didi is not easy to maintain its existing market share and achieve stable income growth. This is also why some investors feel that Didi’s valuation is falsely high.
90% high monopoly
On the 22nd of last month, the State Administration of market supervision and administration, at the “administrative guidance meeting on regulating the order of community group buying”, demanded that the network platform should not restrict competition, and should not use big data to kill each other
Among the participants were didi (other Internet platforms include Alibaba, Tencent, Jingdong group, meituan and pinduoduo).
According to the definition of monopoly market share in the anti monopoly law of the people’s Republic of China, in May 2020, the number of active users of didi platform was 54.39 million, far more than 2.4558 million, 22 times of the latter, and didi accounted for almost 90%.
It can be seen that didi has almost completely monopolized the online car Hailing market.
Market share of online car Hailing
Moreover, at present, Didi’s tax rate for drivers is equivalent to that of taxi companies in some cities, and the taxi premium at rush hours is also higher than that of taxis.
In addition, in the prevention and control of the epidemic in 2021, Didi had new problems. Due to the poor prevention and control of the epidemic, there were more and more online car Hailing drivers infected. Didi and huaxiaozhu were fined 1.41 million in total. At the same time, huaxiaozhu was stopped for a week, and didi suspended free riding and car sharing business.
It has to be said that from the off-line free ride in those years to the current epidemic prevention compliance, safety and compliance have always been the stumbling block in Didi’s rush.
On the one hand, there are investors who are eager to cash in and invest silently for many years, but can’t see the results; on the other hand, there are anti-monopoly regulations that may appear at any time, as well as the continuous layout of Finance and community group buying. In the case of still not seeing a profit point, Didi’s listing in Hong Kong is quite “thirsty for money”!
(statement: This article only represents the author’s point of view, not Sina’s position.)