Xiaomi’s IPO Makes Official Debut in Hong Kong Stock Exchange
The company's CEO and Founder, Lei Jun, acknowledged the offering was a bad timing in the midst of Sino-US trade relations
Evaluation increasing! Xiaomis stock (listed as 1810.10) finds more appreciation after the first couple days. Current price levels peddling between 19 and 20HK$ per share.
As volume is finally stabilizing, the upcoming days could be an interesting entry point for private investors like you.
9th July marked a big milestone for Xiaomi as the tech giant celebrated its IPO at the Hong Kong Stock Exchange. The company’s CEO and Founder, Lei Jun, engaged shareholders and respective signatories and he was especially grateful to all for their support. Earlier this year the company had announced aimed to raise $100 billion valuation from the IPO, a figure that is aggressively contested among the tech companies.
Xiaomi offered its shares at 17HK dollars (US$2.17) per unit but unfortunately the day began on a low as the shares sold at HK$16.60 per share. As the session proceeded into the afternoon the company’s share is estimated to have declined by more than 2%. The price appreciated later and the day closed at $16.80 a share. This placed it at an accumulative figure of about $54 million dollars, which is short of the $100 billion initial valuation Xiaomi had planned to raise from investors. CEO Lei Jun acknowledged bad timing of the IPO in light of the rising trade wars between China and the US, “Although the macroeconomic conditions are far from ideal, we believe a great company can still rise to the challenge and distinguish itself.”
The tech player coins itself to be an Internet Company with an objective to extend a hand of innovation globally through internet thinking. “I wanted to use internet thinking to create mobile phones and enhance the perception of Chinese-made products globally”. Analysts have questioned Xiaomi presenting itself as an Internet Company yet it raises 70% of its revenue from selling hardware (Smartphones). Xiaomi had its 8th anniversary this year and the company has continued to rise exponentially since its founding in 2010. The marketing tactic employed by Xiaomi is cost effective as it saves a lot through internet advertising rather than the normal channels which are considerably more expensive.
The price Xiaomi had set for its valuation figure was significantly higher than what its powerful competitors like Samsung and Apple offer. The recent Sino-US trade relations have had a detrimental effect on the macroeconomic conditions of the market and shareholders fear a spillover but Xiaomi remains positive that its value will increase in the near future as the company has limited its operations in the US only to pens, Mi Headsets among other minor products. The trade wars between China and the US had earlier in May been fueled by America’s ban on ZTE from buying components from the US. ZTE had earlier on violated restrictions on trading American goods with Iran and Pakistan.
What the IPO means for Xiaomi is that it has to diversify its production and increase the scale of its operations to expand to more countries of the world in order to fulfil what it owes its shareholders. Currently, a higher percentage of its market share is in China where it faces stiff competition from peers like Vivo, Huawei or Oppo. Xiaomi came at the top of the sales charts as the leading smartphone vendor in India in 2017, beating out tech giants like Samsung and Apple. It also makes significant sales in European countries like Italy, Germany and recently France. The company has promised to launch its activities in the US before the end of next year.