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Chinese technology group Xiaomi (HK:1810) has exceeded analysts’ expectations with impressive results for the past quarter. In addition to a booming smartphone business, the company is increasingly coming into focus with ambitious plans in the electric vehicle sector. However, competition is fierce, particularly from BYD, the industry leader, which is putting Xiaomi under considerable pressure.
Xiaomi reported quarterly revenue of 111.3 billion yuan (approx. 15.5 billion US dollars), significantly exceeding analysts’ average estimates of 109 billion yuan. Particularly noteworthy is that the company has already delivered 75,869 units of its first electric car, the SU7. The target for the whole of 2025 was 100,000 units.
Electric Car Billion-Dollar Project
With this development, Xiaomi is pushing ahead with the vision of its co-founder Lei Jun, who wants to invest ten billion dollars to catapult the company into the league of leading car manufacturers. After challenging competitors such as Tesla and BYD in the highly competitive Chinese electric car market last year, the group is now focusing on the recently unveiled electric SUV YU7. This model is set to be available from July and plays a key role in Xiaomi’s strategy.
Are Xiaomi’s Shares Dependent on Tesla’s?
Given Xiaomi’s strong quarterly figures and Tesla’s continuing decline in sales, that could be the conclusion. But we want to know more.
In a direct comparison between Xiaomi and the peer group, Xiaomi clearly performs better:
However, if we look at the two charts, both stocks could be very interesting in the long term. However, Tesla’s stock carries a significantly higher risk – also in terms of chart analysis.
Xiaomi’s Stock
It has followed our forecast exactly, falling nicely into the purple box at HKD 36.05 and has been rising nicely again since then. The next long-term target is the red box at HKD 67.20 to HKD 86.45. This represents a rise of at least 60%. But after the subsequent interim correction, the share price will continue to rise. In our view, the share is suitable for a long-term investment horizon.
You can find detailed and, above all, regular analyses, even at lower time levels, on our website and on our YouTube channel.
Tesla Shares
Tesla shares could break down at any time and crash to between $88.70 and $46.84. However, the probability of our forecast increases if the share price manages to break through the resistance cluster between $383.76 and $429.84. We must bear in mind, however, that a crash is no longer possible from a technical perspective until the price exceeds $543.95. Until then, the risk remains.
Nevertheless, we believe that the stock will continue to develop in line with our forecast and that the overall strong momentum structure will continue to roll out upwards. The targets are marked on the chart (red boxes).
Detailed and, above all, regular analyses, including at lower time levels, can be found on our website and on our YouTube channel.
BYD Remains a Powerful Competitor
However, the challenge posed by BYD remains formidable. The industry leader caused a stir at the beginning of the year with an aggressive price war by offering advanced driver assistance systems at no additional cost. Last week, BYD lowered its prices again by up to 34 per cent, further intensifying competition.
Successful Smartphone Business as Backbone
Xiaomi is also enjoying remarkable success in the smartphone segment. Shipments rose by 40 percent year-on-year in China, supported by government subsidies, according to a study by Counterpoint Research. This was also reflected in the share price, which has almost doubled since its low in March and risen by 90 percent in the last six months.
To further strengthen its market position, Xiaomi is investing heavily in the development of its own semiconductor technologies. Investments of seven billion dollars are planned by the end of the decade to increase independence from suppliers such as Qualcomm (NASDAQ:QCOM). Last week, Lei Jun unveiled the new Xring chip, which will be used in Xiaomi’s mobile devices in the future.
Disclaimer/Risk warning:
The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.