Didi Stock Has Enemies at Home and Abroad. What to Know.

Shares in the group fell near 20% on Tuesday in the wake of regulatory scrutiny in China, with the stock down another 4% in the U.S. premarket on Wednesday.

The back story. Founded in 2012 by a former Alibaba employee, Didi went public on June 30 in one of the year’s largest initial public offerings, raising $4.4 billion.

But the company’s fortunes quickly turned: On July 2, China’s Cyberspace Administration launched a probe into Didi over national data concerns and prevented it from adding new users in the country. By July 4, the internet regulator had ordered all Chinese app store operators to remove Didi from their platforms, effectively cutting off new customers in a segment that accounts for more than 90% of the company’s revenue.

Scrutiny quickly spread to other U.S.-listed Chinese app makers. The Cyberspace Administration opened probes into truck-hailing apps from

Full Truck Alliance

(YMM) and

Kanzhun’s

(BZ) online recruiting platform, prohibiting them from adding new users on Monday. Both companies, like Didi, went public in the U.S. in June. That sent shares of all three into free fall on Tuesday.

For Chinese regulators, Didi and its peers represent a threat because they handle sensitive data of potential national concern and, being listed overseas, are accountable to foreign powers. But the embattled Chinese stocks also fit into a U.S.-centric narrative: American investors at risk from companies that, being based in China, answer to an authoritarian regime.

In the final months of President Donald Trump’s administration, lawmakers made a bipartisan effort to increase auditing and disclosure measures for foreign companies whose shares trade in the U.S. The Holding Foreign Companies Accountable Act put the spotlight on the likes of Chinese tech giant

Alibaba

(BABA), which could face delisting from New York without compromise between Beijing and Washington.

Also read: Didi Stock Is Getting Crushed. It’s Starting to Look Like a Buying Opportunity.

What’s new. Marco Rubio called it “reckless and irresponsible” for Didi—an “unaccountable Chinese company”—to have been allowed to sell shares in New York, in a statement to the Financial Times. The Republican senator from Florida and 2016 presidential hopeful had on June 11 called on the Securities and Exchange Commission to block Didi’s IPO.

“Even if the stock rebounds, American investors still have no insight into the company’s financial strength because the Chinese Communist Party blocks U.S. regulators from reviewing the books,” Rubio said in his statement. “That puts the investments of American retirees at risk and funnels desperately needed U.S. dollars into Beijing.”

The senator, a force behind the Holding Foreign Companies Accountable Act, had also introduced an act in May that would prohibit U.S. listings for Chinese companies out of compliance with American regulators.

Plus: NIO and Other Chinese EV Stocks Have a Didi Problem

Looking ahead. Rubio weighing in on Didi adds a new front to the war on U.S.-listed Chinese tech companies: American China hawks. Congress has previously found common ground in tough-on-China policies, and President Joe Biden has made cracking down on China a part of his foreign policy agenda.

Didi and its ilk may now find themselves in a pincer movement between Chinese regulators out for blood and Washington. On the face of it, that’s very bad news.

But this increasingly looks like the making of a foreign policy spat, and not just a one-sided attack on companies by Beijing. Real scrutiny on the groups that started it all may get lost in the noise, and it could eventually fizzle out—making Didi and others a potential buying opportunity.

Moving forward, Rubio’s comments may actually have the most impact on Chinese companies planning to list in the U.S. in the future—if this sets off a new wave of protectionism in capital markets and anti-China sentiment in Congress.