Last year, Xiaomi officially launched its Hong Kong IPO but the performance of the company’s IPO hasn’t been as expected. Last week, the company bought back around 6 million shares as investors are selling the shares after a lockup period.
As per the reports, the Chinese company has bought the Class B shares at an average price of HKD 9.76 (approximately $1.24), totaling nearly HKD 60 million, which roughly converts to $7.6 million. In a statement, Xiaomi said that the company’s board believes that the current financial resources of the group enable it to implement the share repurchase while maintaining a solid financial position.
It also added that its brand proposition with cost-efficient products “will be even more compelling in current market conditions.” Jin Di, longtime industry watcher and former analyst with IDC said, “Xiaomi shares have been negatively affected since the global consumer electronics market cooled in 2018, and the company intends to provide a boost to the market.”
Xiaomi’s share price slumped around 20 percent in the days preceding the expiry of the company’s six-month lockup period. The company has seen its market value nearly halve since it went public in Hong Kong last July as the smartphone market slows.
Last week, the company’s share price dropped by 3 percent following the sale of 231 million Class B shares by an undisclosed investor. Analysts believe that the company’s business performance, especially in internet services, wasn’t exciting enough and it failed to improve investor confidence.
In the year 2018, Xiaomi shipped nearly 1 billion devices. Apart from its hardware business, the company also has an internet services company, offering online music and movies to around 220 million users. It only accounted for 9.3 percent of the company’s total revenue in the third quarter of 2018.
In an annual meeting earlier this month, Xiaomi CEO Lei Jun announced RMB 10 billion (approximately $1.5 billion) investment plan in artificial intelligence (AI) and smart devices over the next five years. The company said it has confidence in its business outlook, which is driven by its smartphones and AIoT strategy — a convergence of AI and internet of things technologies.
