DiDi Global Inc (DIDI) Stock News: Is this state control or an investment?

DIDI stock is back in the limelight again after the stock caught the attention of investors for all the wrong reasons a few weeks ago. The stock is moving around sharply as investors try to digest what exactly the news this morning means for the stock. Bloomberg appears to have the initial report on the matter with the City of Beijing looking to take DIDI under state control. It would appear a tweet from Bloomberg TV anchor Tom Mackenzie is the one gaining the most traction and possibly the first to break the news.   

However, further reports including more detail in a Bloomberg article seem to indicate it is via an investment that this control is to be exercised, not just nationalize (city-ize?) the whole of DIDI. This would make the spike in the DIDI stock price more explainable. The City of Beijing has proposed making an investment in DIDI, according to Bloomberg. Some Beijing-based companies would take a stake in DIDI, with the Bloomberg article naming Shouqi Group and multiple possible investment scenarios being looked at. The article goes on to say that it is not certain if the proposal will be approved by Chinese authorities or what size the stake in DIDI could be. 

DIDI shares spiked up to $9.50 before quickly coming back down but are still trading at $916 at the time of writing for a 4% gain in the premarket.

Didi Global Inc is considered the Uber of China. It is engaged in the business of ride-hailing and taxi services. DIDI only launched on the US stock market back in late June, but the stock has been mired in difficulty almost from the launch with an investigation by the Cyberspace Administration of China (CAC). The CAC had ordered app stores to stop offering DIDI's app and the company had to announce that this would obviously impact revenue. The SEC was moved to examine its oversight of Chinese companies listing on Wall Street, and the SEC officials have stated that clear warnings and disclosure will have to be made to investors about state interference risks in Chinese companies. 

DIDI stock forecast

This is definitely a tricky one to analyze with little chart history to look at. The recent move has been something of a bullish bounce, but is it a dead cat bounce or is there more to it? The Volume Weighted Average Price (VWAP) since the stock market launch is at $11.38 with the point of control (price with the highest volume) close by at $11.91. These would be obvious resistance levels with support from the 9-day Simple Moving Average (SMA) at $8.50.

---