Investors fret about Xiaomi’s game plan, sending shares tumbling
- Investors worry about Xiaomi’s ability to transition into higher-profit segments
- Shares fell 4.6 per cent on smartphone maker’s latest results
It was another painful day for Xiaomi, as investors bailed out after its latest earnings report, leaving the smartphone maker with a clear message: come up with a quicker game plan.
Shares of Xiaomi fell nearly 5 per cent on Wednesday – the first trading opportunity for investors to grade its latest results. That left its shares down a jaw-dropping 32 per cent since it listed in June.
Xiaomi has become a successful smartphone maker by selling them cheaply – its shipments have been ranked the fourth globally by IDC since the last quarter of 2017 – but it has also struggled to grow the more profitable segment of internet services.
It provides internet services by partnering with major app operators and pre-installing the apps on its smartphones. It also runs advertisements through its smartphone operating system.
Investors expect Xiaomi to expand its customer base with cheap smartphones so that it can make more money off the apps and ads, which could one day become a growth engine for the company.
But, so far, the fourth-quarter result is showing that it needs to try harder.