Just last week, LeEco reported that it will be receiving $600 million in fresh funding from 10 companies in its home country of China. This news came after Jie Yuting, the chief executive and founder of LeEco, penned a letter to his staff stating that the group is running low on resources and suffering from expanding too fast in too many directions. There have been concerns that the cash-strapped group may run into a financial crisis which will force it to abandon its electric car project, which has already cost them 10 billion yuan ($1.5 billion). Yueting also mentioned that he will be reducing his salary to 1 yuan ($0.14) and his company will now pursue a slower growth path than before. Now, to make matters worse, Coolpad has unexpectedly warned of an imminent drop in sales, causing its shares to fall by 10 percent.
Coolpad is a smartphone manufacturer based in China and LeEco happens to be the biggest shareholder in the company. On top of that, LeEco recently boosted its stake in the firm to 28.9 percent back in June of this year. After announcing that sales had fallen by 43 percent over the first 10 months of 2016, Coolpad's stock dropped to a four-year low. The firm now expects to post a loss of HK$3 billion ($386.8 million) for the financial year of 2016. Coolpad has put the blame on tougher economic conditions and stiff competition in the Chinese smartphone market for its current troubles. LeEco and Coolpad released a smartphone together in August, called the Cool1 Dual and it was sold mainly in China. However, the device faced stiff competition from other well known Chinese brands such as Huawei, Oppo and Vivo, and didn't sell as well as expected.
LeEco is currently facing financial problems after growing too rapidly in many different sectors. Just last month, the company entered the US market with a lavish launch event in San Francisco, where it announced a host of products which would eventually be sold in the country. Before that, the firm purchased 49 acres of land from Yahoo in California for $250 million back in June, and in the following month, it bought over US based TV-maker Vizio for $2 billion.