Why DiDi Global (OTCPK:DIDI.Y) Is Back In The Spotlight

Autonomous driving trial puts DiDi Global in focus

Didi Autonomous Driving has launched fully driverless R2 Robotaxi trials in Beijing and Guangzhou, putting DiDi Global (OTCPK:DIDI.Y) back on investor radar as it tests commercial potential for autonomous ride hailing.

At a share price of US$3.72, DiDi Global has seen mixed momentum, with a 30-day share price return of 5.98% and a 90-day gain of 3.91%, while the year to date share price return is down 33.09% and the 1-year total shareholder return has fallen 40.67%. This suggests that investors are still weighing long term autonomous driving potential against recent risks.

Compare DiDi Global's autonomous driving push with other potential movers in future transport by scanning our hand picked list of 36 robotics and automation stocks.

For DiDi Global, the recent share price bounce sits against a much weaker year to date and 1 year record. Is this latest move a sign that the business is catching up, or just sentiment resetting?

Price-to-Earnings of 146.8x for DiDi Global: Is it justified?

On Simply Wall St's numbers, DiDi Global screens as expensive on earnings at a P/E of 146.8x versus an estimated fair P/E of 59x and a US Transportation industry average of 31.7x. That sits alongside a last close of $3.72 and a modelled discount of 81.4% to the SWS DCF fair value estimate of $20.01.

The P/E ratio compares the current share price with earnings per share. For a business like DiDi Global, which only recently became profitable and operates in a capital intensive transport and mobility space, a very high P/E often reflects the market placing a lot of weight on future earnings rather than current profits.

Simply Wall St flags that DiDi Global is expensive based on several checks. The stock trades at a P/E of 146.8x versus peers at 13.9x and against the US Transportation industry at 31.7x. Relative to the platform's estimated fair P/E of 59x, that is a very elevated level that the market could eventually move closer to if expectations reset or earnings change. In contrast, the SWS DCF model points to a fair value of $20.01, which is well above the current share price and implies the cash flow based valuation is far more optimistic than the earnings based multiples right now.

Explore the SWS fair ratio for DiDi Global

Result: Price-to-Earnings of 146.8x (OVERVALUED)

However, investors still need to factor in regulatory pressures in China and the long history of share price declines over 1 year and 5 years for DiDi Global.

Find out about the key risks to this DiDi Global narrative.

Another view on DiDi Global's valuation

The earnings based view paints DiDi Global as expensive, yet the SWS DCF model points the other way. On that approach, the estimated fair value is $20.01 per share compared with the current $3.72, which screens as very undervalued on a future cash flow basis.

This gap between a rich 146.8x P/E and a low price against the SWS DCF estimate raises a practical question for investors. Which set of assumptions feels more realistic for how DiDi Global might turn current operations into long term cash generation, and how much volatility you are willing to accept while that plays out.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out DiDi Global for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 54 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment on DiDi Global pulled between concern and optimism, it makes sense to move quickly and weigh the evidence yourself. To see the full picture of both the risks and potential rewards before forming a view, take a closer look at the 3 key rewards and 1 important warning sign.

Looking for more investment ideas beyond DiDi Global?

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• Target potential value with companies that combine quality fundamentals and attractive pricing by checking the 54 high quality undervalued stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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