Didi, a low-key listing, wants people to believe in the future

Didi goes public, but the story to tell is not travel

Founded for 9 years, Didi Chuxing , which has raised more than 20 times and set multiple records, from Angel round, A round, B round to G round and subsequent strategic financing rounds , finally in the New York Stock Exchange on June 30, 2021 Listed.

Unlike almost all Chinese Internet and technology companies during the same period, Didi Chuxing, whose IPO valued at approximately US$67.1 billion, was listed on a rather low-key listing, with no large-scale publicity, no media communication activities, and no “joyfulness” from the listing. Users issue discounts. For every driver and passenger, it is just another day that may be spent in waiting, riding, and congestion.

Didi, a low-key listing, wants people to believe in the future

Going public and entering the open market for financing often means that the company has entered a new stage of operation. How many changes and constants are there in Didi Chuxing?

Online car-hailing is profitable, but not fully profitable

In Didi’s business model, it assumes the role of connecting drivers and passengers through technical means such as Internet platforms and mobile phone applications, and it has the legitimacy of obtaining a share from the car fare. Ride-hailing platforms tend to adjust their share ratios according to various reasons, instead of using the fixed ratio and fixed amount of traditional taxis. The uncertainty of income and ride expenses makes drivers and passengers hold their views.

In the Didi prospectus, from March 2020 to March 2021, China’s travel business revenue was 133.6 billion yuan, international business revenue was 2.3 billion yuan, and other business revenue was 5.8 billion yuan. Obviously, after opening international business and investing in multiple overseas travel services, China is still Didi’s largest market. The total income of Chinese drivers is 110.5 billion yuan, in addition to 6.9 billion subsidies.

Didi, a low-key listing, wants people to believe in the future

In the book, the net profit rate of business travel drops unexpectedly – only about 3.1%, and most people travel when passengers pay income minus driver timepiece calculated profit margins far from. Didi previously explained that after removing 10.9% of passenger preferential subsidies and 6.9% of corporate operating costs, online ride-hailing drivers will receive 79.1% of the total passenger payables in 2020.

The profitability of the online car-hailing business does not mean that the entire Didi is profitable. Except for the community group buying business that is not calculated , Didi’s most loss-making businesses are concentrated in new areas such as shared bicycles and autonomous driving research and development. The group’s net loss in 2020 will reach 10.6 billion. yuan. For Didi, these two businesses represent the future: bicycles continue to acquire new users, and autonomous driving will reduce operating costs and increase profits.

Who can control Didi now?

Didi was once the Chinese Internet company with the most complicated investment relationship. Investors include investment institutions such as Sands River Ventures, Jingwei China, Huaxing, and Jiyuan Capital , as well as Internet giants such as Tencent and Alibaba , and manufacturers such as Apple and Foxconn . There are also state-owned investors such as China Investment Corporation, CITIC Capital, and Guoxin Technological Innovation. It can be described as a gathering of talents .

After 2010, Chinese Internet giants began to turn to investment, choosing to support enterprises in emerging fields instead of leaving the market in person. Tencent, Alibaba, and Baidu invested in Didi, Kuaidi Dache and Uber China respectively to gain market position in the online car-hailing market. . And Didi also absorbed the investment relationship when merging the other two companies, so how to handle the control rights between investors is also the most frequently discussed part of Didi’s business story.

Didi, a low-key listing, wants people to believe in the future

According to the prospectus submitted before the listing, the largest shareholder of Didi is the SoftBank Vision Fund, which holds approximately 21.5% of the shares, followed by Uber, which entered when it merged with Uber China, holding approximately 12.8%. The third largest institutional shareholder is Tencent Holdings. , Holding approximately 6.8% of the shares. However, due to the AB share structure with different rights on the same stock, founder and CEO Cheng Wei, President Liu Qing, and senior vice president Zhu Jingshi will collectively have more than half of the voting rights, and Didi can still be a company controlled by the core team.

Didi’s public financing goals also continue the development direction set by the management team in the past few years-to obtain more opportunities outside of China’s online car-hailing travel market, and to find the possibility of “fighting the future”. Of the financing obtained after Didi’s listing, 30% will be used to expand the current relatively small international business, 30% will be used to develop autonomous driving and electric vehicles, and 20% will be used to develop new products.

Safety measures are beginning to take effect

The several vicious incidents that occurred in 2018 have had a considerable impact on Didi’s brand reputation and development pace. Safety and reliability are the basis for users to choose all services. Failure to save in time is the beginning of the building collapse. Didi made a difficult decision that year: to build a safety system at the expense of annual growth. In 2018, Didi’s technology research and development costs reached 4.4 billion yuan.

Didi, a low-key listing, wants people to believe in the future

According to the founder of the open letter on the prospectus, the driver drops on the background of the access threshold increased scrutiny, carried out more than 200 modifications at the product level to meet the security features, such as the line of passengers both sides pull the black one another in Smart devices with telematics and other functions and security hardware are installed on registered Didi vehicles across the country. Didi has also formed a team that can reach any domestic city within a few hours to deal with local security incidents.

Bit industry representatives participated in the “net about vehicle safety standards” and “Shun windmill safety standards” codification, “2020 Annual Security transparency report” ride business showed drops during this year intercepted nearly 700,000 non-compliant Driver registration applications have implemented nearly 280,000 service suspension measures for unqualified car owners, and the itinerary recording function covers 96% of orders.

The development of the world will fight Uber again

Didi’s market share is related to factors such as service quality, price, and more. It is also inseparable from mergers and acquisitions. By absorbing Kuaidi and Uber, Didi currently holds an absolute leading position in China’s online car-hailing market. As long as Didi can continue to provide travel services that meet the expectations of passengers, and at the same time, the challengers do not open too much difference in ride costs, then the near-monopoly will not be shaken.

The other travel platforms that have survived to this day basically have two things in common. They are all funded and supported by car companies, and most of them are similar in scale. Under the constraints of funding and automakers’ decision-making, these platforms are unlikely to pose a threat to Didi. Although high moral map , Baidu maps and other aggregation services offered gradually rise, but the gap is still huge, and the drops themselves have begun to introduce a third party travel platform.

In the process of territory expansion, Didi has entered about 4,000 cities in 15 countries in the international market. It has also invested in companies such as Grab in Southeast Asia, Ola in India, Lyft in the United States, and Taxify in Europe. Grab also includes Malaysia and Singapore. Southeast Asia, Vietnam, and Indonesia defeated and acquired Uber-related assets and became the largest local travel platform.

Didi, a low-key listing, wants people to believe in the future

Didi is likely to face Uber again, and Uber, which was listed on the market, has gradually recovered in the past two years. Its market value has climbed from less than US$60 billion on the day of its listing to about US$95 billion now. In addition to North America, Uber has also gained more than 65% of the travel market share in Latin America, Europe, Oceania, the Middle East and Africa, and this is exactly the country and region that Didi is trying to enter.

Didi has shown its intention to focus on overseas markets as its next growth center. It is bound to start a fierce battle with Uber, which has already gained a certain market share in these countries and regions and built a moat through services such as food delivery and intra-city delivery. Only this time, the outcome of the two parties is likely to no longer be an acquisition or merger.

Community group buying is full of fog

The community group buying business that suddenly appeared in 2020, Orange Heart Optimal, was once seen as a new strategy for Didi to boost valuation before it went public. Local life services have attracted the attention of many giants, and the business model itself has been run through by native companies. As long as the market size can be obtained, it can be exchanged for profitability.

In this context, Didi started from Chengdu and surrounding cities that its competitors have not yet covered, and entered the community group buying track. Cheng Wei once said, “Didi has no upper limit on its investment in Orange Heart Optimal, and strives to win the first place in the market.” However, Orange Heart Optimal has never ranked first like the online car-hailing business, and it was even later in the end of 2020. Meituan preferred to enter the market, and the latter has more than twice the number of orders.

Didi, a low-key listing, wants people to believe in the future

On the eve of the listing, Didi announced that Orange Heart Optimal will be removed from the operating results after March 30, 2021, and will not be included in the business of Didi’s listing. In the long run, when the community group buying business that has incurred huge losses will end the endless money-burning subsidies, and whether it can stabilize user habits with service and quality, it will be related to whether Didi can honor its original rhetoric.

Concluding remarks

Didi’s listing is more like a phased summary of the online car-hailing business: gaining a market position to resolve safety issues, and at the same time turning to profitability, the core team and investors’ decisions are more correct. And this China’s No. 1 travel platform should obtain investment market performance consistent with its value.

Autonomous driving technology that will affect how much profit, overseas competition related to global share, and community group buying that burns tens of billions and has not yet seen it, is more like a business written by Didi for future investors. story. Is it really not too late to “get in the car” now? Can only wait for time to give the only answer.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/didi-a-low-key-listing-wants-people-to-believe-in-the-future/
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