Is Xiaomi Worth $40 Billion?# Stock
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November 3, 2014, 7:06 A.M. ET
Is Xiaomi Worth $40 Billion?
By Shuli Ren
Forbes reported that privately-held Xiaomi, which IDC now ranks as the world
’s third largest smartphone manufacturer, a result Lenovo Group (0992.HK)
contests, is exploring further funding that could value the company at over
$40 billion. If Xiaomi was able to obtain that valuation, it would be the
world’s most valuable private technology company. Last August, the last
time Xiaomi raised funding, it was valued at $10 billion.
At $40 billion, Xiaomi would be more valuable than Sony (SNE), which has a
market cap of $19.5 billion, and Lenovo, which has a market value of $15.6
billion.
Xiaomi said sales in the first half this year rose about 150% from a year
ago to $5.31 billion and, according to Forbes, “those inside the company
expect revenue to be more than $11 billion for the whole year.” Xiaomi is
reportedly already profitable. At $40 billion valuation, Xiaomi would be
valued at 3.6 times 2014 sales, more expensive than Apple‘s (AAPL) 3.3
times 2014 sales.
And do not forget Xiaomi sells its phones at cost and makes money in its
software. In the past five years, Apple reported an average of 30% operating
margin.
To be sure, Xiaomi is in a sweet spot. It sells at competitive prices to the
fast-growing emerging markets from India to Indonesia.
Is Xiaomi Worth $40 Billion?
By Shuli Ren
Forbes reported that privately-held Xiaomi, which IDC now ranks as the world
’s third largest smartphone manufacturer, a result Lenovo Group (0992.HK)
contests, is exploring further funding that could value the company at over
$40 billion. If Xiaomi was able to obtain that valuation, it would be the
world’s most valuable private technology company. Last August, the last
time Xiaomi raised funding, it was valued at $10 billion.
At $40 billion, Xiaomi would be more valuable than Sony (SNE), which has a
market cap of $19.5 billion, and Lenovo, which has a market value of $15.6
billion.
Xiaomi said sales in the first half this year rose about 150% from a year
ago to $5.31 billion and, according to Forbes, “those inside the company
expect revenue to be more than $11 billion for the whole year.” Xiaomi is
reportedly already profitable. At $40 billion valuation, Xiaomi would be
valued at 3.6 times 2014 sales, more expensive than Apple‘s (AAPL) 3.3
times 2014 sales.
And do not forget Xiaomi sells its phones at cost and makes money in its
software. In the past five years, Apple reported an average of 30% operating
margin.
To be sure, Xiaomi is in a sweet spot. It sells at competitive prices to the
fast-growing emerging markets from India to Indonesia.
