Exclusive information obtained by EqualOcean suggests that Didi's freight business is on the verge of closure due to compliance issues, described by insiders as a critical tipping point.
As early as spring 2022, signs of trouble emerged within the freight business unit. An anonymous Didi freight employee informed the media that from November of the previous year until the end of the current month, layoffs in Didi's freight division exceeded 20%, potentially reaching up to 50%. The planned expansion, slated for July of the previous year, came to a halt, with operational cities gradually closing down, possibly reducing to only 1-2 cities.
The downsizing of Didi's freight business dates back to November 2021, initially affecting outsourced teams, primarily those in business development roles, and gradually extending to in-house teams, resulting in the dismissal of approximately 1-2 individuals in each city.
Didi's freight business launched in June 2020 in Hangzhou and Chengdu and expanded to the Pearl River Delta in July 2021, establishing operations in Guangzhou, Shenzhen, Dongguan, and Foshan.
Despite initial confidence and aggressive subsidies for expansion, Didi's freight business faces a significant gap compared to the dominant player, Lalamove, with other key players such as Full Truck Alliance and GOGOX (2246:HK) actively challenging the existing logistics and freight landscape.
According to the latest IPO filing from Lalamove, as of the first half of 2023, Lalamove holds a 61.0% market share in mainland China based on the Gross Transaction Value (GTV) for closed-loop freight, with mainland China revenue accounting for 91.1% of Lalamove's total revenue.
On March 29th of this year, Lalamove submitted its initial IPO prospectus for listing on the main board of the Hong Kong Stock Exchange under the entity "Lalatech." However, recent industry sources have revealed to EqualOcean that Lalamove's IPO application may have been rejected by the Hong Kong Stock Exchange.
On June 30, 2021, Didi went public on the New York Stock Exchange under the ticker symbol "DIDI," with a valuation exceeding USD 67 billion. However, just two weeks after a successful listing, Didi faced a cybersecurity review led by seven government departments, including the Cyberspace Administration of China and the Ministry of Public Security, due to serious violations involving the collection and use of personal information. Didi was instructed to rectify and halt new user registrations.
In October of the same year, rumors circulated about Didi's plans to go public in Hong Kong in 2024, with a latest valuation of approximately USD 17.3 billion. This marked Didi's attempt to re-enter the capital markets since officially delisting from the NYSE on June 12, 2022. However, as of now, the company has not submitted a formal IPO prospectus.
Didi's current business comprises three main segments: Chinese mobility services (ride-hailing, etc.), international operations (international travel and food delivery), and other services including shared bicycles, electric bikes, freight, autonomous driving, and financial services.
According to Didi's disclosed quarterly reports, Q1 2023 revenue reached CNY 427.12 billion, a YoY increase of 19.1%, with a net loss reduced to CNY 9.18 billion from CNY 160.7 billion in the same period last year. In Q2, Didi's total revenue surged to CNY 488 billion, a YoY increase of 52.6%, with a net loss attributable to shareholders decreasing to CNY 3 billion. In Q3, Didi achieved a total revenue of CNY 514 billion, a YoY growth of 25%, including CNY 466 billion from Chinese mobility services (a 27% YoY increase) and CNY 20 billion from international operations (a 28% YoY increase, with a total order volume of 701 million).