Many doubts have been raised by Xiaomi’s debut on the Hong Kong stock exchange, indeed weighed down by the high expectations that were finally disappointed, and by a media uproar that the Chinese manufacturer usually moves well in its favor but which in this case has turned against it…
Some media speak of an IPO as “lackluster,” and others use slightly more vital qualifiers to describe an Initial Public Offering -IPO, in financial jargon- Xiaomi has only managed to raise $ 4.7 billion, thus staying as the third-largest smartphone maker among the listings.
It was one of the most anticipated stock markets premieres in the tech world in recent times, with Lei Jun talking about the formula success for his company’s and the mantra “don’t be greedy” coloring the day-to-day life of some. employees about to become millionaires. And yet, concerns about the high valuation of the company and the open trade war between China and the United States have ruined a day that was expected to be festive at Xiaomi headquarters.
The data is devastating and is that Xiaomi shares fell almost 6 percent at the beginning of the day, recovering a few hours later to 16.96 Hong Kong dollars, and always moving below the 17 HK $ exit.
Lei Jun and his management team had an estimated valuation of $ 100 billion earlier this year. Still, the company is worth around $ 53 billion right now, a significant downturn that experts tell us quite convincingly:
Trading below the issue price is because investors still had doubts about the stock’s valuation, which was relatively high compared to similar tech companies like Tencent or Apple.
Linus Yip, estratega de First Shanghai Securities.
Another key indicator is the multiple earnings valuations, which left Xiaomi ahead of the rivals above with a valuation of 39.6 times its 2018 earnings. Apple is trading at 16 times its earnings, with Tencent’s valuation multiplied by 36 your benefits currently.
The doubts with the initial valuations and, without a doubt, the looming war that is brewing between the United States and China and that has already entailed fines, and tariffs in some markets have not helped a Hong Kong exchange that is currently trading at lows of the last nine months.
Is Xiaomi the Chinese Apple? Well, no, at least not in its current assessment …
It is challenging to qualify manufacturers like Xiaomi, especially since the Chinese market is probably the most complicated on the planet in terms of competition, with very high sales volumes and narrow profit margins. In addition, their companies do not usually dedicate only to technology since Xiaomi also sells clothing, office supplies, and other types of products in addition to its well-known smartphones and electronic devices.
Not everything is terrible in Xiaomi’s stock market launch. A company with only eight years of history has managed to raise 4.72 billion dollars in the middle of a tense climate, becoming the most significant issue of a technology company in recent four years worldwide.
Matching Apple is a long way off, as the Cupertino firm is close to becoming the first American company valued at 1 ‘trillion North American’ dollars – you already know that in the United States, the trillion equals one European trillion_, with currently 945,000 million of trading dollars, which will surely grow in a couple of months closer to the arrival of the new iPhone.
The Xiaomi guys still have a way to go. Still, their sales continue from record to record; their international landing is already moving at a perfect pace, their fans number in the millions, and their future is promising… Will the Chinese firm reach become a giant of the caliber of Apple?
Sharlene Meriel is an avid gamer with a knack for technology. He has been writing about the latest technologies for the past 5 years. His contribution in technology journalism has been noteworthy. He is also a day trader with interest in the Forex market.