DiDi IPO analysis - Cons!

Many people probably have written about the prospectus. Some have mentioned the profitable last quarter or just about the company's profits. But to our opinion, the most important factor to consider before considering participation in DiDi IPO – DiDi in China is no longer growing.

In 2019, revenue increased by only 11% compared to 2018, and then the pandemic and lockdowns began, the numbers are no longer indicative. Saturation happened at a relatively small level: the platform's pre-consumer turnover is $35 billion, 0.25% of China's GDP. Not much for a monopolist.

The average commission of the service is 25.6%, of which 4.6% he returns subsidies to the driver, and 11% makes a discount for the passenger. In the end DiDi is left with 10%, which go to marketing - with it Unit-economy of the company is hanging around zero. Expenses for programmers and the like are a net minus, roughly 10% of GMV. In terms of cabs - everything is more or less normal, all the world aggregators look like this, but again - all this is accompanied by growth. Marketing and discounts attract a new audience, not the old one.

In addition to the core business, there are side initiatives.
DiDi is being launched in other countries. This is still a percentage of the Chinese turnover, but there is a multiple of growth - it is easier to wrest a share from local competitors than to grow the domestic market.

DiDi really wants to be electric and carbon-neutral. The word "electric" appears 187 times in the document, only 3 times rarer than China or the dollar sign. Aside from words, there are also deeds. DiDi has a million electric cars plugged in, it owns 30% of all electric charging, and its cars make 40% of all electric trips in China. Last November, DiDi launched its own electric car model - but it seems to have rather failed, still not selling a thousand units.

Like everyone else in the industry, DiDi is making its own autopilot, but there's less progress here than with electricity. Yes, they're testing it. No, when it will go is unknown.

In other countries, DiDi, like everyone else, delivers food from restaurants; in its native China, it deals only with mobility - apparently its shareholders (AliBaba and Tencent) forbid it from competing with its own services.