Daily Brief: Xiaomi’s Blazing Its Way To The Top, And Investors Are Digging The Show

Daily Brief: Xiaomi’s Blazing Its Way To The Top, And Investors Are Digging The Show

almost 2 years ago3 mins

Mentioned in story

Xiaomi reported better-than-expected results on Tuesday, so the world’s third-biggest smartphone maker might want to get used to life as a leader.

What does this mean?

Festive shoppers flocked to Xiaomi’s updated lineup last quarter, keen to snap up phones with the latest chips, camera sensors, and operating systems. Those holiday sales helped the Chinese smartphone giant ship 3.9% more units around the world last quarter than the same time the year before – while the wider industry shipped 3.2% fewer.

Xiaomi’s profit, then, grew by a better-than-expected 40% last quarter compared to the year before. And if investors weren’t already seeing dollar signs, this might’ve done the trick: the company plans to buy back more than $1 billion worth of its own shares, reducing their supply and pushing up their price. Add in that it expects supply issues to ease up in the second half of the year, and investors couldn’t complain: they sent its shares up 6%.

Xiaomi stock
Source: Google Finance

Why should I care?

The bigger picture: World domination.

Xiaomi wants to keep that momentum going, so it’s currently in talks with Indian manufacturers to make phones there to export globally. That could be a good move: India’s the world’s fastest-growing smartphone market, so more exposure there should be great for sales. And since the government hands out cash incentives to companies that boost India’s electronics manufacturing sector, Xiaomi can give its bottom line a boost by spending less on production there.

Zooming out: Xiaomi’s a trendsetter.

Xiaomi’s not the only one buying back its shares: Alibaba upped its buyback program by $10 billion on Tuesday. The tech giant will be hoping that’ll restore investors’ confidence in the company, after slowing growth and government crackdowns sent its shares down to multi-year lows. And since analysts reckon a bunch of Chinese tech firms could follow suit, that might explain why fellow tech companies JD.com, Tencent, and Baidu also saw their shares soar after the news.

Alibaba buybacks

Keep reading for our next story...

Nike Reported Better-Than-Expected Results

Nike image

Nike reported better-than-expected quarterly results earlier this week, as the world’s biggest sportswear retailer brought its well-dressed foot firmly back into its own camp.

What does this mean?

Nike scored a hat-trick last quarter. Firstly, production was back on track after most of its key suppliers got up and running again – geddit? – following Covid-related shutdowns. Secondly, strong demand sent sales in North America – Nike’s biggest market – up 9% from the same time the year before.

Nike scored its third win by continuing its move away from discount-happy wholesalers and investing heavily in its own online and flagship stores instead. By doing that, it made 15% more revenue from direct-to-consumer sales last quarter, meaning direct sales made up nearly half of its total sales. And speaking of total sales, they grew by a better-than-expected 5% last quarter, so impressed investors sent its shares up 6%.

Nike stock

Why should I care?

Zooming in: Nike has problems too.

Nike wasn’t without issues, mind you: the retailer reckons its sales would’ve grown even more if it weren’t for clogged shipping routes holding up its stock. On top of that, sales from its Chinese business – still reeling from a boycott of Western brands – fell 5% last quarter. Nike’s not sure when either of those issues will clear up, and it has the effects of war and rising material prices to deal with too. The company’s not even going to try and predict how that will go: it held off on giving an outlook for the coming year.

China is Nike’s most profitable market
China is Nike’s most profitable market | Source: The Wall Street Journal

The bigger picture: Totally meta.

Nike’s found somewhere to shelter from those supply issues: the metaverse. The retailer launched “Nike Virtual Studios” earlier this year, which’ll oversee the company’s push into the space and try to establish the sneaker company as a key player in the virtual world. Nike’s not alone, either: rival Adidas worked with Bored Ape Yacht Club and Prada to make NFTs in recent months.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG