Xiaomi sinks after shares unlocked for sale

HONG KONG • Many Xiaomi Corp investors, who could only watch as the stock shed US$14 billion (RM57.54 billion) in market value, are now able to join in on the selling.

Expired yesterday was the six-month lockup period that followed the company’s Hong Kong debut, during which some employees and cornerstone investors were banned from disposing of their allocated shares.

It’s been painful: Xiaomi has dropped to HK$10.34 (RM5.42) from a listing price of HK$17, losing another 6.9% yesterday on almost seven times its average volume of the past three months.

More than three billion shares were unlocked, equal to about 19% of those outstanding, according to data compiled by Bloomberg. The lockup period for controlling shareholders — such as chairman and founder Lei Jun — was extended yesterday for another 365 days, Xiaomi said in a statement. It was previously due to expire in July.

Touted by bankers last year as China’s answer to Apple Inc, Beijing-based Xiaomi sought a valuation that would have made it the most expensive smartphone maker in the world. The stock trades at 16 times projected 12-month earnings, less than half its July multiple. It’s still 32% more expensive than Apple, which is reeling from its worst quarterly rout in more than a decade.

To be sure, longer-term investors may want to hold on to Xiaomi’s shares rather than dump them at a loss. — Bloomberg