Initial public offerings can be successful (often) or unsuccessful (less common). But rarely can they destabilize an industry or imperil a fast-growing sector of the economy. Yet, that may have just happened, or be about to happen, in two long-anticipated IPOs: Didi Global, Inc. (Didi) and Robinhood Financial LLC (Robinhood). The former could bring to a screeching halt all cross-listings by Chinese issuers in the United States, and the latter will likely force the SEC to rethink its long-standing tolerance of payments for order flow. Although these developments could have occurred even without these two IPOs, both appear to have precipitated action by regulators. Both also underline the critical nature of the disclosure decisions made by securities lawyers, often under urgent time pressures.

Didi

The IPO of this firm, which holds a near monopoly in the Chinese ride-hailing business, seemed an apparent success on June 30, 2021 when it raised $4.4 billion and achieved an overall valuation of over $67 billion. Then, the sky fell in. China's Internet regulator (the Cyberspace Administration) instructed Didi to cease signing up new users while it conducted its investigation, and then ordered Didi's mobile app removed from stores in China because of its concerns about data collection and security. Although the offering had gone public at $14.00 per share, its stock price quickly fell, and, as of this Monday, it was hovering around $11.42—a drop of around 20% and sufficient to trigger actions by the ever vigilant plaintiff's bar.