What's going on?

The world�s fourth-largest smartphone maker, Xiaomi, reported better-than-expected quarterly profit on Tuesday � but its shares continue to trail most Chinese stocks� stellar 2019.

What does this mean?

When Xiaomi listed on the Hong Kong stock exchange last year, one of its aims was world domination � and it�s wasted no time in achieving exactly that. Sales outside of China more than doubled last year and now represent 40% of the company�s total revenue. In Western Europe, Xiaomi shipped over 400% more smartphones in 2018 than in 2017, becoming the region�s number four brand. Who says there�s a slowdown in global smartphone sales?


The US might be next up, although Xiaomi hasn�t announced a game plan yet. With Chinese rival Huawei bossing it at home but under greater scrutiny abroad, Xiaomi could find customers where Huawei can�t.

Why should I care?

For markets: Investors are no longer locked up.

In an initial public offering, existing shareholders typically commit to staying invested for a certain period of time (a.k.a. a �lockup�). Some of Xiaomi�s investors weren�t allowed to sell their stock until January. That means there were likely more sellers around than there�d normally have been � potentially preventing Xiaomi from enjoying the stock price rises seen by other Chinese companies following better-than-expected economic data and tax cut announcements. Xiaomi�s market debut was a damp squib, and its share price has declined since; but for early investors who paid as little as 0.25� per share in 2010 and 2011, selling in January would still have netted a cool 57,000% profit.

Zooming out: Apple bites.

The king of expensive smartphones, Apple, is making waves. On Monday, it released new iPads � but that�s an appetizer. The entr�e is next Monday, when Apple�s expected to announce new video streaming and news subscription services. The hope is that this strengthens its highly profitable �services� ecosystem, locking in existing iPhone users � and enticing Xiaomi showoffs to switch.