Morgan Stanley issued a research report today stating that Xiaomi’s management revealed that it remains optimistic about the three major business areas this year and is confident that it will increase its market share with its active offline expansion strategy. Internet services can benefit from the group’s monthly active users ( MAU) population growth and higher average revenue per user (ARPU) for high-end mobile phone users, but gaming revenue may encounter resistance this year.
The strong growth of smartphone market share may translate into MAU growth. Xiaomi’s continued penetration into the high-end market can also drive ARPU up. However, large game publishers renegotiated the revenue sharing of several new games in the second quarter, which affected Xiaomi. As for the gaming revenue performance in the third quarter, it is expected that Internet services will still face challenges as a whole. MS has been given a target price of $HKD 24 for Xiaomi shares.
Xiaomi closed down 5.6% on Thursday, with a 32 Hong Kong dollars price tag.
Xiaomi price lost the steam after UBS issued a research report, lowering the target price of Xiaomi stock from 23 Hong Kong dollars to 22 Hong Kong dollars; the rating was lowered from “Neutral” to “Sell”.