Xiaomi’s Income Rises Although Its Shares Drop, How come?

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On November 19, 2018, Xiaomi Group released its third quarterly report. It was stated in the report that various financial indicators showed an increasing trend and impact, the price of Xiaomi shares rose by 8.38%.

However, there are facts that cannot be covered that the stock price has dropped compared to when it was first issued. Registered on the Hong Kong Stock Exchange on July 9, 2018, the price of Xiaomi shares is HK $ 16.60. And on November 23, 2018, the share price was HK $ 14.44, down 13.01%.

Xiaomi shares were also recorded at the highest price, which was HK $ 22.2 on July 18, 2018. That is, in just four months, the value of Xiaomi shares evaporated more than HK $ 120 billion. Of course, this is not a light job that must be addressed by Lei Jun as the CEO of Xiaomi .

In the first three quarters of 2018, Xiaomi’s revenue was more than HK $ 140 billion. Yes! there was a year-on-year increase of 64.11%. Net income was HK $ 11 billion, an increase of 132.94%. Among the products produced, Xiaomi’s smart TV business has grown rapidly.

From the perspective of product revenue sharing, currently smartphones, IoT and consumer products have become the main revenue sources for Xiaomi. According to the third quarter report in 2018, Xiaomi smartphones accounted for 67.99% of the company’s total revenue.

Back to the problem of Xiaomi’s plummeting share price, a number of people insisted that this issue was closely related to investor confidence. Especially with regard to the future of Xiaomi’s financial profitability. Mentioned free cash flow is one indicator.

In 2017, Xiaomi Group’s free cash flow was HK $ 22 billion. In the first three quarters of 2018, there was an increase of HK $ 900 million. In addition, Xiaomi also stated that R & D costs in the third quarter increased by 90.7%.

Frankly, when everyone still thinks whether Xiaomi is a hardware manufacturer or internet company? Not a few analysts believe that Xiaomi can become a hardware manufacturer that does not take the usual path while at the same time becoming a growing internet-based company.

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