Xiaomi’s IPO began on Monday in Hong Kong to a fairly slow start, with trade slipping more than 2%, sometimes dropping by 5.88%. At opening, each Xiaomi share was valued at 16.60 Hong Kong dollars ($2.12), below the initial offering price of HK$17 ($2.17). During the day prices slipped to as low as HK$16 ($2.04) but managed to climb to HK$16.80 ($2.14) by closing time.
Xiaomi made 2.18 billion shares available for purchase and was expected to sell them for between HK$17 ($2.17) and HK$22 ($2.8). One estimation says that after paying fees and expenses, Xiaomi has raised about HK$23.97 billion ($3.05 billion). In June, we said that Xiaomi was looking to raise about $5 billion (HK$39.22 billion) from shares, while it didn’t meet its goal in the first day of trading, it is over half way there and maybe things will pick up for the unique firm.
Speaking to CNBC, Xiaomi’s President and co-founder, Lin Bin, spoke about the stock price and whether it would start selling Chinese Deposit Receipts (CDRs):
“I think short-term stock price is mostly dictated by market conditions. What we will be doing is to focus on the long-term growth of our business. … We decided to postpone the CDR just to ensure the success of the CDR with a very graceful, mutual agreement with CSRC (China Securities Regulatory Commission). So we will be revisiting CDR at a proper time in the future.”
One of the reasons that has been floated for Xiaomi’s slow start is that investors are generally unsure about the company because of its uniqueness. The firm is famous for online flash sales and doesn’t tend to keep much stock, it makes the hardware as it sells it which allows it to make improvements much more quickly and it drives demand as there's a limited number in the inventory. There has been a bit of debate as to whether or not it is a hardware company or an internet company, perhaps when the dust settles and investors know what they’re getting into we could see the price move in Xiaomi’s favour.
Let us know in the comments if you think Xiaomi will do well in the medium and long term in terms of its stock price.