Some Investors Still Skeptical About Xiaomi's IPO: Report

Xiaomi, one of the world's most valuable startups, is expected to go public on the Hong Kong Stock Exchange next month, and while the company enjoyed a highly successful spell since early 2017, some investors remain skeptical about its overall prospects. Even as China remains the largest smartphone market on the planet, the firm recently dropped to the fourth position in its home country, having been outperformed by Huawei, OPPO, and Vivo, in that order. The overall demand for handsets in the Far Eastern market is also on a sharp decline that's expected to continue this year, having been highlighted as the main reason for the history's first drop in global smartphone shipments and sales by numerous industry trackers, with the last research firm to describe that trend as such being the International Data Corporation.

Reuters reports that some investors are also worried about Xiaomi's profit margins, especially as the firm is going as far as to boast how little money it makes and plans to make on its hardware going forward. While that pledge didn't encompass the company's software unit which is understood to be much more lucrative due to its advertising-focused business model, the fact remains that Xiaomi is a company completely oriented toward growth instead of profit and appears to have no intentions of changing course following its initial public offering. That state of affairs is likely to discourage most investors who aren't looking for long-term commitments, thus limiting the potential success of Xiaomi's IPO. The company is still understood to be targeting a valuation of up to $80 billion, having reportedly set its IPO fundraising target at $10 billion in cash.

Another concern recently raised in regards to Xiaomi's prospects is its growing focus on offline sales as new brick-and-mortar locations are expected to ramp up its operating costs in a significant manner going forward, eating into already thin profit margins. Xiaomi remains committed to that offline strategy due to its growth-first philosophy, having most recently expanded to new locations in India and Europe. Its stateside endeavors are also understood to be limited due to possible patent violations that it could end up being accused of in the United States, though the firm is expected to eventually try its lack with a more concentrated smartphone push in the world's largest flagship market. Xiaomi's IPO will take place in the first half of July should the company receive final securities approvals for the move next week as it originally planned, according to recent reports and filings with China's regulators.

Copyright ©2019 Android Headlines. All Rights Reserved
This post may contain affiliate links. See our privacy policy for more information.
You May Like These
More Like This:
About the Author

Dominik Bosnjak

Head Editor
Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]