A Look at DiDi (OTCPK:DIDI.Y) Valuation Following New Public Transit Partnership Announcement

DiDi Global (OTCPK:DIDI.Y) has just signed a partnership agreement with Tianjin Public Transport Group to explore projects like online ride-hailing buses and MaaS integration, a move that signals strategic growth in digital mobility for the company.

See our latest analysis for DiDi Global.

Momentum in DiDi Global’s share price has been strong this year, with a 31.29% year-to-date share price return and an impressive 31.85% total shareholder return over the past twelve months. This latest partnership comes after other digital mobility moves and appears to be fueling optimism about DiDi’s long-term prospects, especially given its remarkable 290.57% three-year total shareholder return.

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But with this wave of good news, is DiDi Global’s share price still trading at a compelling value? Or have investors already factored in all the potential upside from these strategic moves?

Price-to-Sales Ratio of 1x: Is it justified?

DiDi Global currently trades at a price-to-sales ratio of 1x, which stands out compared to its sector peers and the broader transportation industry. Its latest close was $6.21.

The price-to-sales ratio shows how much investors are paying for every dollar of revenue the company generates. For companies like DiDi Global that are unprofitable or early in their growth cycle, this ratio gives a better sense of value than earnings-based multiples because it focuses on sales rather than profits.

Right now, DiDi's price-to-sales multiple is below both the US transportation industry average (1.4x) and its peer average (3.3x). Compared to a fair price-to-sales ratio estimate of 1.3x, the stock is still trading at a notable discount. This could indicate potential room for a valuation shift if the market reassesses growth and profitability prospects.

Explore the SWS fair ratio for DiDi Global

Result: Price-to-Sales of 1x (UNDERVALUED)

However, regulatory changes or slower than expected revenue growth could quickly alter DiDi Global’s valuation outlook, making future returns less certain.

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

Another View: SWS DCF Model Suggests Deeper Value

While DiDi Global’s low price-to-sales ratio points to potential undervaluation, our DCF model takes a different approach by estimating the company’s fair value based on its future cash flows. According to this model, the stock is trading 44% below its fair value, also signaling an undervalued position. Could the market be underestimating DiDi’s long-term earnings power?

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 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own DiDi Global Narrative

If you want to dig deeper or take a different view on DiDi Global, you can analyze the data and craft your own outlook in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding DiDi Global.

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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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