Xiaomi growth expectations amiss as its shipment targets dwindles

Xiaomi saw incredible growth in the previous year with customers piling up and investors lining to amass funding at a US$45 billion (AU$62.56) valuation. However, analysts now believe the growth period for the company has cooled down with expectations suggesting Xiaomi will miss its shipment target this year.

The smartphone market is now struggling as it is likely to miss its shipment target this year, according to Bloomberg. Sources familiar to the company's production plans said that suppliers have already reduced their internal targets for Xiaomi because of the anticipated shortfall. Selling 80 million smartphones this year may be a long shot for the company partly because of China's slowing economy.

According Barrons, global smartphone growth forecast has been lowered to 13 percent for 2016 and 11 percent for 2017. This reflects the weaker-than-expected smartphone/handset market for the current year in China. The problem is that other smartphone manufacturers have penetrated China, which is consequently Xiaomi's largest market.

The falter is expected as the company has surged past Apple and Samsung in the Asian country. It now needs to prove to investors its story of youthful disruption and online sales to beat competition. Xiaomi needs to find a way around competitors copying its sales strategy and China's slowing performance.

"All those expectations of growth aren’t being realized, which now makes that $45 billion valuation unfeasible," Hong Kong-based Sanford C Bernstein analyst Alberto Moel told Bloomberg.

"The argument was that their business is kind of like Apple and they’re growing very fast, but they’re no longer growing so fast and they’re not as good as Apple," he added.

There is still hope for the company as analysts believe that growth may be reignited this fourth quarter during China's Singles’ Day shopping promotions along with the release of the latest Redmi Note.

“I am not concerned about the valuation because, over time, their market is substantial,” Bloomberg quoted Hans Tung, managing partner at Xiaomi investor GGV Capital in Menlo Park, California. “Over the next 12 months, it’ll become increasingly obvious what Xiaomi is doing in the smart home and services space.”

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