Everything that could go wrong went wrong for Xiaomi Corp. as it heads toward its trading debut on Monday.
The high-profile listing billed as the largest technology offering since 2014 is expected to open 10 percent lower in the wake of the lukewarm response even from the smartphone maker’s avid fans.
Xiaomi attracted 9.5 times subscription for the retail portion of its US$3 billion IPO, according to its announcement to the Hong Kong Exchanges and Clearing this morning. The shares were priced at HK$17 each, on the low end of the range indicated for the offering.
The high-flying technology company seemed to have got it all wrong – well, as far as the 4Ps of marketing are concerned.
First, pricing. Xiaomi offered a minimum lot of shares at HK$4,444.44 – and I am not sure who’s the clever mind behind that most inauspicious set of numbers.
Of course, that amount is based on the top end of the pricing range, which means investors would get a refund of about HK$1,000 now that the price is at the low end.
Next, place. Xiaomi aspired to be the first company with China depositary receipts (CDRs) only to find that it was a bit too complicated to do so. The sudden withdrawal of its plan to list in China is not a good sign for Xiaomi, which has to settle for a valuation of close to US$50 billion, or half of what it wants.
Then, product, which is supposedly its strongest suit. The Mi 8 flagship smartphone, despite being advertised in several key MTR stations, is already one month late after its debut in the mainland. Its Mi Band 3 fitness tracker, said to be a tenth of the price of Fitbit, is also hard to find in Hong Kong.
Hong Kong may just be a small market, but come on, make it like we’re a big deal so that everyone would want to have a piece of your company.
Last, promotion. As we have mentioned before, Xiaomi brokers offered an outdated Mi Band 2 to lure its clients to buy the shares. Not a smart gimmick. Why didn’t they give out Xiaomi electric shavers instead? It also costs around HK$200 and I use it almost every day.
Those who know that Xiaomi literally means “little rice” would probably be on the sideline on Monday because it suggests that the share price will only have a “little rise”.
That’s a corny joke being passed around by idle brokers, but it may hold some truth: perhaps Xiaomi is for long-term investors and not for the skittish, especially in the currently choppy investment environment.
– Contact us at [email protected]