Xiaomi Corp. raised $5.4 billion by selling investors on its promise as a high-growth internet company. Some are starting to lose faith.
The Beijing-based purveyor of mostly cheap smartphones has sunk 19 percent from its peak after its initial public offering despite a spate of positive ratings — mostly from the same banks and outfits that sponsored its coming-out party. On Wednesday, Xiaomi reports earnings for the first time as a public company, offering a close-up of two of its most important initiatives: an international expansion and its evolution beyond hardware and into online services from music to video, a la Apple Inc.
Lei Jun, Xiaomi's billionaire co-founder, has consistently pushed the internet-giant narrative. That helped the company price its IPO at multiples far higher than celebrated tech names such as Tencent Holdings and Facebook Inc. But even then the market balked, and the company ended up valued at around half the $100 billion price tag touted just months prior. Analysts preach caution at a time investors are fleeing tech stocks, spooked by trade tensions and a backlash against the industry's outsized clout. The stock was largely unchanged Wednesday, hovering barely above its IPO price.