Since September 2nd, Xiaomi’s share (HKG:1810)price has hit a record high. But Xiaomi’s stock price has started to pull back. It has now fallen below HKD20 and has pulled back more than 20% from the high point, falling into a technical bear market. From a technical point of view, Xiaomi has completed the gap in August 27th. What will happen next?
Nomura Securities pointed out that the recent steadily rising stock price of Xiaomi has allowed its price to reach a higher point, while Huawei’s bad situation may have bottomed out.
Market consensus and some investors agreed that 2021– Smartphone 2022 shipment volume will reach more than 200 million pieces. But to reach 200 million shipments , Xiaomi must meet three conditions:
1) Huawei should basically withdrew from the Chinese market;
2) Xiaomi’s market share surpassed all major competitors;
3) Xiaomi’s overseas mobile phone shipments increased by double-digit year – on -year.
At present, it is not difficult for Xiaomi to achieve foreign shipments, but the realization of the first two conditions is not optimistic. We believe that Huawei is unlikely to disappear completely in the Chinese market, and Xiaomi and Apple, Samsung, Oppo, Vivo compete for market share is not easy.
Xiaomi has had a very comfortable stand in the smartphone business in recent years. The Chinese manufacturer has repeatedly scored with well-equipped devices that could convince both users and the trade press.
However, Samsung seems to be very aware that customers are asking for lower prices. In order to respond appropriately, the South Korean manufacturer has now announced the Galaxy S20 FE. This relies on an OLED screen with 120 Hz, ample RAM and a large battery. A real exclamation point is set with the price. Around $700 are due for the high-end smartphone, which puts Xiaomi in a tight spot.
Nomura Securities maintained Xiaomi’s target price at 23 Hong Kong dollars, but downgraded its rating to neutral.
As I stated earlier, Xiaomi stock is still a great buy, but between then and this article XIaomi CEO sold 350 million shares which pulled back the price. From this point of view (and if nothing bad happens again) I expect that price should bounce back once it hits low HKD18.00 values.