Xiaomi (SEHK:1810): Examining Valuation After Recent Share Price Rebound

What’s Behind Xiaomi’s Sudden Jump?

If you have Xiaomi (SEHK:1810) in your portfolio or on your watchlist, the latest move might have you checking your screens twice. Shares just popped up 2.6% in a single day. While there wasn’t a major headline to spur the advance, such moves may signal shifting investor sentiment or simply the return of risk-on appetite in the tech sector. For anyone weighing whether to hold, add, or take profits, it is worth exploring what’s changed under the hood lately and where things might go from here.

Looking at the bigger picture, Xiaomi’s year has been a story of strong resilience and upward momentum. After rising by over 67% since the start of the year, the stock has now delivered a three-year gain of more than 5%. Recent weeks saw a pullback, but the past month brought a 6% rebound. Meanwhile, revenue and net income growth both tallied high double-digit percentages over the past twelve months, adding fuel to hopes that Xiaomi’s new product lines and overseas expansion could keep powering results.

With the stock pushing higher again, the big question is whether Xiaomi is trading at a discount to its future growth, or if the market has already priced in all the upside possibilities.

Most Popular Narrative: 9.8% Overvalued

According to the most widely followed narrative, Xiaomi is currently considered overvalued by nearly 10% against its calculated fair value, based on a set of bullish, future-focused assumptions. This perspective hinges on bold top-line growth projections, future profit margins, and a premium valuation multiple more often attributed to global tech leaders rather than hardware makers.

“Xiaomi’s revenue could realistically reach $80 to $100B by 2028, driven by EV success (the biggest swing factor), IoT and services monetization (high-margin growth), and premium smartphone adoption offsetting market saturation. Its ability to pivot from a hardware vendor to an integrated tech ecosystem (phones, AI, and EVs) will determine if it joins the $100B revenue club. Watch for EV progress in 2024 to 2025 and margin trends in services.”

Want to know the real math behind this sky-high valuation? This narrative is betting big on Xiaomi’s ability to leap into new markets and break through historical profit ceilings. What aggressive numbers are hidden in those projections? Unlock the full perspective and discover which ambitious targets, if hit, could redefine Xiaomi’s future in tech.

Result: Fair Value of $51.83 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent margin pressure or delays in Xiaomi’s electric vehicle rollout could quickly challenge the optimistic growth narrative that investors are betting on.

Find out about the key risks to this Xiaomi narrative.

Another View: Discounted Cash Flow Perspective

While some see Xiaomi’s upside already priced in, our DCF model takes a cash flow lens and points to an even higher level of caution. Valuation signals challenge the optimistic multiple-based outlook. Could the fundamentals be sending a different message?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Xiaomi for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Xiaomi Narrative

Feel like there’s more to the story, or want to dig through Xiaomi’s numbers firsthand? You can craft your own narrative from scratch in just a few minutes. Do it your way.

A great starting point for your Xiaomi research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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