Xiaomi is the world’s fourth-largest phone manufacturer and is leading both the largest smartphone market in the world; India and China. With the goal of “Making quality technology accessible to everyone”, Xiaomi has been able to become the best-selling smartphone brand in India which does not do false advertising.
What happened?
Investors rushed to cut their losses as the bad week of Xiaomi Corp. got worse.
The stock fell 3.6 percent in Hong Kong, taking its three-day decline to 17 percent, or $6.2 billion market value.
Analysts at Goldman Sachs Group Inc. and China International Capital Corp. were the latest to bring down their price targets on the Chinese smartphone maker, joining at least five others who have tempered their estimates just this week.
The outcome of this stock value falling
As a result of this, billions of Xiaomi shares have been unlocked for sale after the six-month lockup period that followed the company’s debut expired, also enabling many shareholders, who could only watch as the stock shed $14 billion in market value, to finally join the selling.
Reports of a flood of off-exchange block trades say that some have taken the opportunity to offload the stock, even though Xiaomi is nowhere near its HK$17 listing price.
That may be because shareholders who have owned a piece of Xiaomi since the company’s first funding rounds can actually pocket in a significant profit by selling their unlocked stock.
Analysts forecasts
Analysts have been trimming their profit and sales forecasts for Xiaomi, blaming China’s slowing smartphone market and intensifying competition from rivals like Huawei Technologies Co.
Xiaomi was one of the most hyped initial public offerings of 2018, with bankers initially vending a valuation of as much as $100 billion. Its market capitalization has dropped to about $30 billion.
After having such a bad experience in the Hong Kong stock market, what is going to be the next move of Xiaomi Corps.? Will it use the Indian and Chinese market to compensate for the loss? Whatever their new strategy will be, they ought to come something solid to make sure they regain their position in the market.
