DIDI Stock is Ready to Soar after China Dropped their Regulations

Today we are looking at DiDi Global Inc. (NYSE: DIDI), to determine if the DIDI stock is a good buy. We will look at DIDI financial ratios, analyst ratings, and valuation to determine a DIDI stock forecast and price. What does DIDI Do? DiDi Global Inc., a mobility technology platform, provides ride hailing and other services in the People's Republic of China, Brazil, Mexico, and internationally. It offers ride hailing, taxi hailing, chauffeur, hitch, and other forms of shared mobility services, as well as enterprise business ride solutions; auto solutions comprising leasing, refueling, and maintenance and repair services; electric vehicle leasing services; bike and e-bike sharing, intra-city freight, food delivery, and more. As a result of this they have been dubbed the "Ube of China". Laying out Information for a DIDI Stock Forecast Who are DiDi Global Inc.'s Competitors? In order to undergo a comparable analysis (to determine DIDI stocks value), we need to first outline who DIDI's competitors are. These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to DIDI, and have a market cap similar to DIDI (if possible). By keeping this in mind, I found the following list of companies to be some of DIDI stocks closest competitors: UBER, LYFT, and DASH Has DIDI Stock Been Mentioned in the News Recently? "Shares of Chinese ride-hailing giant Didi surged more than 24% during regular trading in the U.S. on Monday after The Wall Street Journal reported regulators in China are concluding investigations into the company. The Journal report said authorities would lift a ban on Didi adding new users as early as next week and reinstate the company’s app in domestic app stores, citing people familiar with the matter. By the Monday market close on Wall Street, Didi shares jumped 24.32%." If you would like to continue  reading more about this you can do so here This is huge news for the DIDI stock, as the reason way the DIDI Stok price decreased by over 50% in a month following their IPO and has caused their stock to be held down near $1-2 for so long. Now that DIDI has nothing holding them back they can start to attract new investors again, grow their revenues, and run their business a usual. Hopefully this can allow DIDI to post some better earnings moving forward and generate more hype around their stock. DiDi Global Inc.'s Earnings are Surprisingly Good Despite Chinese Regulations (All Numbers in CNY (Yen)) DIDI Earnings (Yearly): DIDI Revenues: In FY 2020, DIDI experienced a yearly decrease in revenues of $-13.05B (or -8.43%) resulting in a total revenue figure of $141.74B. DIDI Cost of Revenues: In FY 2020, DIDI experienced a yearly decrease in their cost of revenues of $-13.84B (-9.91%), resulting in a total revenue figure of $125.82B. Since the decrease (of -9.91%), in DIDI's cost of revenue was lesser (by -1.48%) than the decrease (of -8.43%) in DIDI's revenues, we should expect that DIDI experienced an increase (roughly 1.48%) in their FY gross profits. DIDI Gross Profit: In FY 2020, DIDI experienced a yearly increase in their gross profit of $790.67M (or 5.23%) resulting in a total gross profit of $15.91B. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY. DIDI EBITDA: In FY 2020, DIDI experienced a yearly increase in their EBITDA of $582,198,000 (or 9.71%) resulting in a total EBITDA of $-5.41B. This increase (of 9.71%) stems from the fact that DIDI experienced a increase in their gross profits of 5.23% (as we saw in the previous bullet point). DIDI Net Income: In FY 2020, DIDI experienced a yearly decrease in their net income of $867,700,920 (or -8.08%) resulting in a total net income of $-10.51B. DIDI EPS: As a result of DIDI's decrease in net income of $867.7M, DIDI's EPS also decreased (by $-0.23) from $-2.34 in FY 2019 to $-2.57 in FY 2020 Overall, due to their decrease in EPS and Net Income (which are two of the most important financial measures), it is safe to say that DIDI’s 2020 financial report was poor. However, given their poor performance they were still able to grow some important financial metrics such as their gross profits and EBITDA. 2020 was a long time ago, so it would make sense if we also based DIDI's financial performance off of a more recent earnings report, DIDI Earnings (Quarterly): DIDI Revenues: In Q4 2021, DIDI experienced a quarterly decrease in revenues of $1.9B (or -4.45%) resulting in a total revenue figure of $40.78B. DIDI Cost of Revenues: In Q4 2021, DIDI experienced a quarterly decrease in their cost of revenues of $4.86B (-11.92%), resulting in a total revenue figure of $37.6B. DIDI Gross Profit: In Q4 2021, DIDI experienced a quarterly increase in their gross profit of $2.97B (or 157.14%) resulting in a total gross profit of $4.86B. DIDI EBIT: In Q4 2021, DIDI experienced a quarterly increase in their EBITDA of $30.15B resulting in a total EBITDA of -$45.66B. DIDI Net Income: In Q4 2021, DIDI experienced a quarterly increase in their net income of $30.2B resulting in a total net income of -$176.66M DIDI EPS: As a result of DIDI's increase in net income of $30.2B, DIDI's EPS also increased (by $6.47) from $-6.48 in Q3 2021 to -$0.01 in Q4 2021 Overall, it seems as though DIDI had a great financial performance as many of their financial metrics grew, most notably their EPS (by $6.47), as well as their net income (by $30.2B), and other metrics (as you can tell from the above bullet points). Additionally, DIDI stock beat their EPS estimate by -$0.07 (or 800%), as they reported an EPS of $0.01 for the quarter (compared to their estimated EPS of -$0.07). This earnings report tells a different (and more favourable) story of DIDI's earnings. As we move forward with a DIDI free from regulations, we can only hope that these figures continue to climb, and DIDI can become profitable yet again. Is DIDI Share Dilution an Issue? As part of their Q1 2021 earnings release, DIDI stated that they currently have 4.17B Shares Outstanding (weighted average), which is up 0 shares (from 4.17B shares outstanding in Q1 2020). Furthermore, DIDI stock has up to 162.49M of shares that they can issue (thereby diluting DIDI's stock). This maximum dilution for the period would only have a dilutionary effect on DIDI of 3.9%. Overall, it is good that DIDI has not experienced any recent hare dilution , however, the fact that they can dilute their shares by 3.9% should be somewhat worrying to investors DIDI Stock Price Prediction (Take with a Grain of Salt) Using a Comparable Analysis to Determine a DIDI Price Forecast Price to Book (P/B): DIDI's current P/B ratio is 0.12, compared to the average P/B ratio of DIDI's peers being 3.52. This implies that DIDI is undervalud and their share price should change by a factor of 2833.33% to be at fair value (based on DIDI's P/B compared to the P/B of their peers). Price to Equity (P/E): DIDI stock P/E ratio is currently -0.14, compared to the average P/E ratio of DIDI's peers being -13.51. This implies that DIDI is undervalued and their share price should change by a factor of 9550% to be at fair value (based on DIDI's P/E compared to the P/E of their peers). Overall, both of these comparable are implying that DIDI is immensely undervalued and the DIDI stock needs to experience 2800% stock price growth. Do I think this is reasonable and will happen? No, of course not. hat I do think is that DIDI is undervalued, and their peers are massively overvalued (which is contributing to the crazy growth estimates. Is DIDI a good stock to buy right now? Overall, due to the fact that DIDI appears to be undervalued, the fact that China has dropped their regulations on DIDI, and the fact that DIDI Sock's earnings are starting to turn around, I think it is safe to say that DIDI is a buy. I think that the DIDI stock is massively undervalued and can experience growth in their share price of 100%. One thing to watch out for though is their potential dilution.

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DIDI Stock is Ready to Soar after China Dropped their Regulations

Jun 22, 2022

bullish

general Analysis

[6 min Read]

blog post cover photo

Today we are looking at DiDi Global Inc. (NYSE: DIDI), to determine if the DIDI stock is a good buy. We will look at DIDI financial ratios, analyst ratings, and valuation to determine a DIDI stock forecast and price.

What does DIDI Do?

DiDi Global Inc., a mobility technology platform, provides ride hailing and other services in the People's Republic of China, Brazil, Mexico, and internationally. It offers ride hailing, taxi hailing, chauffeur, hitch, and other forms of shared mobility services, as well as enterprise business ride solutions; auto solutions comprising leasing, refueling, and maintenance and repair services; electric vehicle leasing services; bike and e-bike sharing, intra-city freight, food delivery, and more. As a result of this they have been dubbed the "Ube of China".

Laying out Information for a DIDI Stock Forecast

Who are DiDi Global Inc.'s Competitors?

In order to undergo a comparable analysis (to determine DIDI stocks value), we need to first outline who DIDI's competitors are.

These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to DIDI, and have a market cap similar to DIDI (if possible).

By keeping this in mind, I found the following list of companies to be some of DIDI stocks closest competitors:

UBER, LYFT, and DASH

Has DIDI Stock Been Mentioned in the News Recently?

"Shares of Chinese ride-hailing giant Didi surged more than 24% during regular trading in the U.S. on Monday after The Wall Street Journal reported regulators in China are concluding investigations into the company.

The Journal report said authorities would lift a ban on Didi adding new users as early as next week and reinstate the company's app in domestic app stores, citing people familiar with the matter.

By the Monday market close on Wall Street, Didi shares jumped 24.32%."

If you would like to continue reading more about this you can do so here

This is huge news for the DIDI stock, as the reason way the DIDI Stok price decreased by over 50% in a month following their IPO and has caused their stock to be held down near $1-2 for so long. Now that DIDI has nothing holding them back they can start to attract new investors again, grow their revenues, and run their business a usual. Hopefully this can allow DIDI to post some better earnings moving forward and generate more hype around their stock.

DiDi Global Inc.'s Earnings are Surprisingly Good Despite Chinese Regulations (All Numbers in CNY (Yen))

DIDI Earnings (Yearly):

  • DIDI Revenues: In FY 2020, DIDI experienced a yearly decrease in revenues of $-13.05B (or -8.43%) resulting in a total revenue figure of $141.74B.
  • DIDI Cost of Revenues: In FY 2020, DIDI experienced a yearly decrease in their cost of revenues of $-13.84B (-9.91%), resulting in a total revenue figure of $125.82B. Since the decrease (of -9.91%), in DIDI's cost of revenue was lesser (by -1.48%) than the decrease (of -8.43%) in DIDI's revenues, we should expect that DIDI experienced an increase (roughly 1.48%) in their FY gross profits.
  • DIDI Gross Profit: In FY 2020, DIDI experienced a yearly increase in their gross profit of $790.67M (or 5.23%) resulting in a total gross profit of $15.91B. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY.
  • DIDI EBITDA: In FY 2020, DIDI experienced a yearly increase in their EBITDA of $582,198,000 (or 9.71%) resulting in a total EBITDA of $-5.41B. This increase (of 9.71%) stems from the fact that DIDI experienced a increase in their gross profits of 5.23% (as we saw in the previous bullet point).
  • DIDI Net Income: In FY 2020, DIDI experienced a yearly decrease in their net income of $867,700,920 (or -8.08%) resulting in a total net income of $-10.51B.
  • DIDI EPS: As a result of DIDI's decrease in net income of $867.7M, DIDI's EPS also decreased (by $-0.23) from $-2.34 in FY 2019 to $-2.57 in FY 2020

Overall, due to their decrease in EPS and Net Income (which are two of the most important financial measures), it is safe to say that DIDI's 2020 financial report was poor. However, given their poor performance they were still able to grow some important financial metrics such as their gross profits and EBITDA. 2020 was a long time ago, so it would make sense if we also based DIDI's financial performance off of a more recent earnings report,

DIDI Earnings (Quarterly):

  • DIDI Revenues: In Q4 2021, DIDI experienced a quarterly decrease in revenues of $1.9B (or -4.45%) resulting in a total revenue figure of $40.78B.
  • DIDI Cost of Revenues: In Q4 2021, DIDI experienced a quarterly decrease in their cost of revenues of $4.86B (-11.92%), resulting in a total revenue figure of $37.6B.
  • DIDI Gross Profit: In Q4 2021, DIDI experienced a quarterly increase in their gross profit of $2.97B (or 157.14%) resulting in a total gross profit of $4.86B.
  • DIDI EBIT: In Q4 2021, DIDI experienced a quarterly increase in their EBITDA of $30.15B resulting in a total EBITDA of -$45.66B.
  • DIDI Net Income: In Q4 2021, DIDI experienced a quarterly increase in their net income of $30.2B resulting in a total net income of -$176.66M
  • DIDI EPS: As a result of DIDI's increase in net income of $30.2B, DIDI's EPS also increased (by $6.47) from $-6.48 in Q3 2021 to -$0.01 in Q4 2021

Overall, it seems as though DIDI had a great financial performance as many of their financial metrics grew, most notably their EPS (by $6.47), as well as their net income (by $30.2B), and other metrics (as you can tell from the above bullet points).

Additionally, DIDI stock beat their EPS estimate by -$0.07 (or 800%), as they reported an EPS of $0.01 for the quarter (compared to their estimated EPS of -$0.07).

This earnings report tells a different (and more favourable) story of DIDI's earnings. As we move forward with a DIDI free from regulations, we can only hope that these figures continue to climb, and DIDI can become profitable yet again.

Is DIDI Share Dilution an Issue?

As part of their Q1 2021 earnings release, DIDI stated that they currently have 4.17B Shares Outstanding (weighted average), which is up 0 shares (from 4.17B shares outstanding in Q1 2020). Furthermore, DIDI stock has up to 162.49M of shares that they can issue (thereby diluting DIDI's stock). This maximum dilution for the period would only have a dilutionary effect on DIDI of 3.9%. Overall, it is good that DIDI has not experienced any recent hare dilution , however, the fact that they can dilute their shares by 3.9% should be somewhat worrying to investors

DIDI Stock Price Prediction (Take with a Grain of Salt)

Using a Comparable Analysis to Determine a DIDI Price Forecast

  1. Price to Book (P/B): DIDI's current P/B ratio is 0.12, compared to the average P/B ratio of DIDI's peers being 3.52. This implies that DIDI is undervalud and their share price should change by a factor of 2833.33% to be at fair value (based on DIDI's P/B compared to the P/B of their peers).
  2. Price to Equity (P/E): DIDI stock P/E ratio is currently -0.14, compared to the average P/E ratio of DIDI's peers being -13.51. This implies that DIDI is undervalued and their share price should change by a factor of 9550% to be at fair value (based on DIDI's P/E compared to the P/E of their peers).

Overall, both of these comparable are implying that DIDI is immensely undervalued and the DIDI stock needs to experience 2800% stock price growth. Do I think this is reasonable and will happen? No, of course not. hat I do think is that DIDI is undervalued, and their peers are massively overvalued (which is contributing to the crazy growth estimates.

Is DIDI a good stock to buy right now?

Overall, due to the fact that DIDI appears to be undervalued, the fact that China has dropped their regulations on DIDI, and the fact that DIDI Sock's earnings are starting to turn around, I think it is safe to say that DIDI is a buy.

I think that the DIDI stock is massively undervalued and can experience growth in their share price of 100%. One thing to watch out for though is their potential dilution.

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DIDIY

DiDi Global Inc - ADR

2.93

0.13
4.64%

Return

-3.93%
Change % Since Posting
-0.12
Change Since Posting
3.05
Price When Posted

Metrics

3.35
Target Price
8/ 10
Confidence
2-4 Weeks
Timeframe
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