The Xiaomi stock price has pulled back in the past few weeks as investors focus on the ongoing economic war between the United States and China. After surging to $26 in March, the stock has plummeted by over 26% to the current $19. This article explores why the Xiaomi share price could rebound in Hong Kong.
Xiaomi’s business is thriving, but faces a key risk
Xiaomi share price has crashed in the past few weeks as tensions between the US and China have escalated. These tensions have led to a sharp increase in tariffs between the two superpowers, with the US charging Chinese goods a 145% tariff. China has responded by announcing a 125% tariff.
On the positive side for Xiaomi, it has little business in the United States, with most of its sales coming from China and the emerging market, especially in China. Available data shows that the company has a 1% market share in the US. It also manufactures most of its products in China.
Therefore, from a tariff perspective, Xiaomi is largely insulated from the ongoing trade war. Even if it had a market share in the US, its products would not be tariffed since Donald Trump announced that smartphones would be exempt from the tariffs.
However, Xiaomi faces a major risk in that the company still uses American-made parts, especially from Qualcomm. Qualcomm’s SnapDragon’s chips power its most advanced smartphones, with the rest coming from MediaTek, a Taiwanese company.
Therefore, the ongoing trade war means that Trump can turn its screws on Xiaomi by banning sales of chips to the firm. This action would mirror what he did with Huawei, a company that once dominated the smartphone market. While Huawei has rebuilt its business, its market share has shrunk considerably in the past few years.
The other risk is that Xiaomi has entered the electric vehicle industry, making it a direct competitor to Elon Musk’s Tesla. Musk is one of Trump’s top advisors, meaning that he could engineer some actions against the company, including sanctioning top suppliers like Infineon.
Read more: Here’s why the Xiaomi stock price is beating Apple
Xiaomi earnings download
The most recent results showed that Xiaomi’s business is doing well. Its results showed that revenues jumped to over 109 billion RMB in the fourth quarter from 73 billion in the same period last year, a 48.8% increase.
The gross profit soared by over 43% to 22.45 billion RMB, while the profit for the period surged by 90% to 8.9 billion RMB. The annual revenue, gross profit, and profit soared by over 35%, 22.5%, and 34.9%, respectively.
These numbers are impressive because they came at a time when Apple, the biggest player in the industry is slowing. Apple’s annual revenue rose by just 2.02% in 2024, down from 2.8% in 2023 and 7.79% a year earlier.
Further, Apple has struggled to have a hit product in the past few years, with its Vision Pro’s sales being negligible. Xiaomi has launched a highly popular EV, and just recently, it raised over $5.5 billion to expand the division.
Xiaomi stock price analysis
The daily chart shows that the Xiaomi share price peaked at $59.3 earlier this year and then plunged to $35.8 as the trade war escalated. It has now moved above the 100-day and 200-day Exponential Moving Averages (EMA), a sign that bulls remain in control. It also formed a small bullish island reversal pattern.
Xiaomi stock price has moved to the major S/R level of the Murrey Math Lines. Therefore, the shares will likely continue rising as bulls target the strong pivot reverse point at $50, up by about 15% above the current level.
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