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Didi shares reverse income and plummet on account of plan to delist from the US.

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Didi shares reversed earlier gains and fell sharply in US pre-trading on Friday after the company announced it would delist from the New York Stock Exchange and seek a listing in Hong Kong instead.

The shares of the Chinese ride-hailing giant have been hit by regulatory issues in its home country since it went public in the US earlier this year. The share has meanwhile roughly halved compared to its initial listing price.

Didi's share price fell more than 10% at around 7:30 a.m. ET, after initially rising as much as 14% on Friday morning.

The company announced on Friday that it would be delisted "immediately" from the New York Stock Exchange and began preparations for a separate listing in Hong Kong. According to an announcement on another international stock exchange, US shares are to be converted into "freely tradable shares".

The delisting marks an early end to Didi's short-lived time as a US-listed company. Investors are now hoping for a smooth transition of Didi's US-listed shares to Hong Kong. But details on how the company will go about it are thin. Didi's move to press ahead with delisting at least eliminates the risk that it will be forced to do so by the regulatory authorities.

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"While US stocks will be freely tradable after being listed on the HK Stock Exchange, we believe this move will be the last straw for many investors looking to reduce losses," said Neil Campling, global TMT analyst at Mirabaud Equity Research, in a note.

"The stock also has many retail investors who we think will try to run for exit."

Daniel Ives, managing director of Wedbush Securities, said the delisting was "just another black eye for Chinese technology stocks."

"The Street is still very different from Chinese technology stocks and this Didi situation is another red flag," Daniel Ives, managing director of Wedbush Securities, told CNBC, adding that Didi shareholders likely backed another one from SoftBank Companies, Grab, would switch to playing the Asian mobility market.

Grab went on Thursday after a deal with special purpose vehicle Altimeter Growth Corp. on the stock exchange. The shares of the Singapore-based driver service and grocery supplier lost more than a fifth of their value by the close of trading.

China's technical crackdown

Beijing regulators have flexed their muscles to keep large Chinese internet companies in check. The crackdown began with Alibaba founder Jack Ma and his fintech company Ant Group, whose IPO was suspended late last year after critical comments from the Chinese tech billionaire to regulators.

Beijing's tech crackdown soon shifted to other areas, including ride-hailing. Chinese regulators reportedly raised concerns about the security of Didi's data prior to the company's IPO in June. Two days after his debut, Didi was hit by criticism from the Beijing cyberspace agency. A week later, officials ordered Chinese app stores to remove Didi's main app.

According to a Bloomberg report last week, Chinese regulators have asked the company's executives to come up with a delisting plan from the United States. Didi declined to comment at this point.

Meanwhile, Washington is also trying to tighten restrictions on Chinese companies trading on American stock exchanges. On Thursday, the US Securities and Exchange Commission passed rules that allow it to remove foreign stocks from the stock market if they fail to meet the exam requirements.

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