The logo of Didi Chuxing on the wall of its headquarters in Beijing, China, May 18, 2016.
(Kim Kyung-Hoon/Reuters)

Tech titan Didi Chuxing’s stock shares plummeted more than 20% Tuesday after Chinese regulators ordered its app to be removed from the app store while it conducts a cybersecurity review of the company.

Didi is in the ride-hailing business operating e-taxis, comparable to American versions Uber and Lyft.

The company’s share price dropped to $11.58 Tuesday morning, representing a 25% decrease from $15.53 at the last market close. Markets were closed Monday for the holiday, so traders were delayed from reacting to the news by selling or buying until Tuesday.

The development comes less than a week after Didi was added to the New York Stock Exchange. Didi was allegedly advised by Chinese government officials to push off its U.S. listing and re-examine its network security many weeks before its initial public offering, the Wall Street Journal reported Monday.

On Didi’s decision to go public in light of China’s intervention, Kendra Schaefer, a partner at Beijing-based strategic advisory consultancy Trivium China, said on CNBC’s “Squawk Box Europe” Tuesday that Didi “definitely should have considered pulling the IPO.”

She said that Chinese financial regulators may not have given Didi “a clear directive”, noting that “it is absolutely possible that Didi wasn’t really sure which way to jump and facing investor pressure they decided to just go for it.”

After years of applying a relatively laissez-faire approach, China is taking a much harder line against the tech sector and has signaled it will expand oversight over fin-tech firms. In addition to the Didi investigation, China is also conducting cybersecurity probes of U.S.-listed Boss Zhipin and subsidiaries of Full Truck Alliance.

In June, it was revealed that Chinese regulators were also reviewing Didi for antitrust violations, Reuters reported.

In its IPO prospectus, which discloses the risks, opportunities, and financial details ahead of selling stock to the public, Didi stated the possibility that regulators could take punitive action against the company.

“We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any penalty with respect to any violations of anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, product quality, tax and other related laws and regulations. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the general public going forward,” Didi noted in its prospectus.

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