On Thursday, Chinese ride-hailing giant Didi Chuxing filed a prospectus for its upcoming blockbuster U.S. IPO, which revealed a company that has weathered heavy losses in recent years but may be creeping closer to profitability.
“We aspire to become a truly global technology company,” wrote CEO Will Wei Cheng and president Jean Qing Liu in the prospectus about its planned U.S. IPO, which may come as soon as the third quarter of this year.
Didi’s IPO is expected to be the largest of 2021. The company was valued at $62 billion after its latest fundraising round last August. The prospectus did not mention Didi’s expected valuation, but Reuters reports that the company may seek to raise $10 billion at a valuation of $100 billion in the debut.
The SoftBank Vision Fund is Didi’s largest shareholder, owning 21.5% of company’s shares. U.S. ride-hailer Uber owns a 12.8% stake, which resulted from Didi purchasing Uber’s China business in 2016, while Chinese tech giant Tencent also holds a 6.8% stake in the firm, according to the prospectus.
Founded in 2012, the Beijing-based ride-hailer reports that it has 493 million annual users and 15 million drivers across 15 countries. Didi reports that its ride-hailing business in China accounts for over 90% of its revenues, while its international businesses and emerging segments like e-bikes, autonomous driving, and freight business account for less than 10%.
In the prospectus, which was filed with the U.S. Securities and Exchange Commission (SEC), Didi revealed that it lost $1.6 billion in 2020, but also struggled to turn a profit in the years before the pandemic. In 2019, Didi reported a net loss of $1.5 billion, and in 2018 a net loss of $2.3 billion.
“We have incurred significant losses since inception, and we may not achieve or maintain profitability,” Didi noted under the “risk factor” section in the prospectus.
Didi may pull itself out of the red this year. In the first quarter of 2021, Didi reported net income of $837 million.
The prospectus notes the toll the COVID-19 pandemic took on Didi’s revenues. From 2018 to 2019, the company’s revenues grew by 11%, but revenues fell 10% from 2019 to 2020 as lockdowns in China during parts of last year stunted Didi’s ride-hailing business.
The prospectus noted that the firm’s “biggest challenge” was coming through a 2018 scandal for a service it had recently launched called Hitch.
Hitch is a platform that matches car owners with other commuters, but in 2018 two drivers murdered their passengers while using the service. Didi suspended Hitch for over a year before relaunching it with added protections for drivers and riders, the company said.
“We felt an immense sense of sadness and responsibility and began a period of deep self-reflection,” the prospectus says.
Now, the company says it’s planning for the future with major investments in emerging technologies like electric vehicles and autonomous driving.
“We envision a world where A.I. and big data power a shared, electric, smart, and autonomous mobility network,” the prospectus notes. Last year, Didi launched the first electric vehicle tailored specifically for ride-hailers, and it has also created a self-driving unit that has raised over $800 million from investors and partnered with Swedish automaker Volvo to supply the autonomous vehicles.
“Over the past nine years, we have had many ups and downs,” Wei and Liu wrote in the prospectus. “We have faced intense competition, serious safety incidents, and the ongoing COVID-19 crisis. But through all of these challenges, we learned and grew as a team.”
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