Xiaomi Plumbs New Lows as Early Investors Dump Shares
Shares of smartphone maker Xiaomi Corp. sank to all-time lows Wednesday on volume not seen since shortly after its blockbuster initial public offering (IPO) last year, as investors sold the stock following the end of a major lockup period.
The high volatility prompted the company to issue a statement saying its CEO and CFO wouldn’t sell their shares for at least another year in a show of confidence in Xiaomi’s future.
Xiaomi shares fell 6.9% in Hong Kong on Wednesday, adding to a 7.5% decline the previous day. Trading volume on those two days totaled more than 200 million shares, or well above the company’s average volume that seldom sees more than 50 million shares trade on a single day.
The sell-off came as a six-month lockup period expired following Xiaomi’s IPO that was the world’s second largest last year, raising $5.4 billion. More than 3 billion shares were unlocked, equal to about 19% of those outstanding, according to data compiled by Bloomberg.
Following a brief price spike after the IPO, Xiaomi’s shares have moved steadily downward from their listing price of HK$17 ($2.17). At their current level the shares have now lost about a third of their value, giving the company a market capitalization of about $34 billion — well below the $45 billion it was worth at the time of Xiaomi’s last major pre-IPO funding at the end of 2014.
Despite being profitable, Xiaomi has suffered from heavy reliance on smartphones at the ultra-competitive low end of the market. In a bid to shed that reliance, the company is preparing to parse itself into a number of brands targeting different market segments, starting with a spinoff later this week of its low-end Redmi brand that currently accounts for the big majority of its sales.
In a bid to stabilize the stock price, Xiaomi announced Wednesday that co-founder and CEO Lei Jun would hold on to most of the company stock he holds through two other entities for at least the next 365 days. Those two entities, Smart Mobile Holdings Ltd. and Smart Player Ltd., were set to hold a combined total of nearly 30% of Xiaomi’s shares after the IPO, according to the prospectus.
“For the purpose of expressing their confidence in the long term value of the company, (Lei Jun and the two companies he controls) undertook … on a voluntary basis that, for a further period of 365 days commencing from the date of this announcement, they shall not dispose of any shares of the company directly or indirectly beneficially owned by them,” the announcement said.
The statement added the pledge did not apply to up to 640 million Class B shares of the company controlled by Lei that can be donated to charities. It said company CFO Chew Shou Zi also agreed not to sell any of his company shares for the next 365 days.
Contact reporter Yang Ge (email@example.com)
Aug 07 16:15
Aug 07 15:42
Aug 07 04:24
Aug 06 19:23
Aug 06 19:01
Aug 06 17:30
Aug 06 16:01
Aug 06 14:18
Aug 05 18:04
Aug 05 17:20
Aug 05 17:03
Aug 05 16:47
Aug 05 15:15
Aug 05 13:25
Aug 04 17:56
- 1Exclusive: Ant Group Aims to Raise $30 Billion in Record-Shattering IPO
- 2Chinese Researchers Find Mutation That Could Make Covid-19 10 Times More Infectious
- 3TikTok Shifts Global Operations Base to Europe
- 4Central Bank Delays New Rules for $12.9 Trillion WMP Industry
- 5China Dodges Corporate Bond Default Bullet but Outlook Is Darkening
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas