Didi Ban’s Effects Touch Wall Street, Super Apps


In China, the rise of the super app may face headwinds.

Or think of it this way: If a super app is a chain of linked activities and services, from banking to shopping to ride hailing to food delivery to — well, you name it — one of those links has been removed.

As PYMNTS and others have reported, government regulators in China have forced Tencent’s WeChat messaging service and Ant Group’s Alipay to take Didi off their apps.

And Didi, to go a step further, is no longer searchable in app stores in China.

So, in one fell swoop, the government has hobbled Didi’s presence in the country both in terms of being actively used and in terms of being sought out to be used in the first place.

It may not come as a surprise to see that on Wall Street, the reaction has been swift, mere days after having gone public through American depositary receipts (ADRs) here in the states (as of this writing, the ADRs are down 20 percent over the course of roughly two sessions).

Weighing and Voting Machines

Wall Street, it’s been said, is both voting machine and weighing machine. Voting in a sense as a popularity contest among investors. What’s hot at the moment curries favor, and the shares are bid up.

The weighing aspect of it is related to gauging future prospects of both top and bottom lines.

Valuation, after all, is a practice of projecting financial metrics and then assigning multiples (we’re speaking generally here).

If Didi is removed from sizable and scalable avenues of visibility and accessibility, it follows that growth opportunities are rendered less certain, not just for Wall Street but for the development and adoption of the super app. For the mechanics of gliding through that continuum, a user would be able to open and use Didi’s app while in the middle of using another service, in effect linking everyday activities while going through them in real time. In terms of scale, WeChat has an estimated 1 billion users, and Alipay has 900-plus million customers.

Didi has warned of a revenue drop and is also grappling with the increased scrutiny over data security.

In PYMNTS’ dive into Didi’s F-1, in tandem with its initial public offering (IPO), the company detailed a massive revenue opportunity. Management said in the filing that “the new mobility paradigm is expected to significantly increase the already massive mobility market opportunity.”

Mobility, according to the filing, represents a $6.7 trillion opportunity, where share mobility and electric vehicle penetration, respectively, stand at only 2 percent and 1 percent. Along with that low penetration, the global mobility market is expected to grow to as much as $16.4 trillion by 2040, and shared mobility is expected to be nearly 24 percent of the tally.

One can only achieve market penetration if one’s app is available to be downloaded, used, and used again (to reinforce repeated behavior). As China goes, so goes Didi for now and for a while — international sales were only two percentage points of the total consolidated revenues in the March quarter.



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