Xiaomi shares surge 340% in one year, raising EV launch expectations
Xiaomi 340% yearly stock surge sets high expectations for upcoming results
Xiaomi Corp.’s meteoric rise, with its share price surging over 340% in just over a year, has transformed it into one of China’s most-expensive tech stocks.
The Hong Kong-listed company is now trading at 38 times forward earnings estimates, nearly double the valuation of Tencent Holdings and surpassing even major U.S. tech giants like Apple Inc. Xiaomi’s market value has surged by more than $130 billion, fueled by its success in China’s crowded electric vehicle (EV) market, mirroring its dominance in smartphones, reports Bloomberg.
However, the impressive gains have raised the stakes for the company’s upcoming financial results and the launch of its electric SUV. Investors are keen to see whether Xiaomi can justify its lofty valuation, particularly as market caution surrounds the company’s ability to meet ambitious growth targets and sustain its upward sales trajectory.
EV Launch a Crucial Test for Xiaomi
The upcoming summer launch of Xiaomi’s YU7 electric SUV is seen as a critical milestone in the company’s $10 billion EV venture. Analysts and investors are closely monitoring the specifications and pricing of the 5-meter-long SUV, which is expected to compete in China’s increasingly popular market for larger vehicles.
The key question for Xiaomi is whether it can scale up production quickly enough to meet demand. Industry checks suggest consumer wait times for delivery could exceed seven months, and the company has set an ambitious goal of delivering 300,000 vehicles this year. Xiaomi’s billionaire founder, Lei Jun, has emphasized that reducing delivery wait times is a top priority.
While Xiaomi’s EV business may not offer many surprises in its near-term results, investors are hopeful for strong smartphone sales, particularly with higher prices boosting revenue.
However, with the company’s current valuation nearing levels that assume flawless execution, its ability to meet production targets and sustain growth will be under intense scrutiny in the coming months. The outcome of the YU7 SUV launch could determine whether Xiaomi’s impressive market gains continue or face a significant correction.
Reminder, a $439 billion rally in Chinese tech megacaps this year has propelled them far ahead of their once-dominant US peers, and investors believe there’s still room for further growth.
