On Wednesday, shares of Xiaomi Corporation increased after it announced to buy back stocks for $1.28 billion.
The leading Chinese smartphone maker soared 5.92% or 0.11 points to $1.92 per share. It extended a gain of 6.13% to $14.20 per share yesterday.
Correspondingly, the upward movement added $2.79 million to its market capitalization.
The repurchase plan of Xiaomi demonstrates confidence in its business outlook. In addition, the scheme will ultimately benefit the company and create value for shareholders.
The firm believes that its financial resources are sufficient to support the share buyback while maintaining a healthy financial position.
Previously, it mentioned repurchasing plans on repeated occasions. In early March, the business announced a $1.28 billion stock buyback on the open market.
In recent years, Chinese tech firms significantly suffered amid the continued Beijing regulatory scrutiny in the sector. Their shares slumped due to the market risk aversion.
The repurchase will help stabilize expectations and safeguard shareholders’ rights and interests.
Then, the latest rally in the stock market also indicates the rebound of investors’ sentiment.
Meanwhile, China’s top financial affairs watchdog vowed last March 16 to take measures to support the economy.
The government agency ensured to maintain the stability of its housing and capital markets.
Accordingly, Xiaomi’s move follows Alibaba, which announced the most significant Chinese stock buyback of a record $25.00 billion on Tuesday.
The plan of the e-commerce giant will be effective for two years through March 2024. As of March 18, 2022, Alibaba had bought 56.20 million American depositary shares.
In line with this, analysts anticipated more tech firms to follow suit with buyback plans.
Moreover, Xiaomi also reported better-than-expected fiscal fourth-quarter revenue. The metric grew 21.40% to $13.45 billion.
It edged up from the average analysts’ estimate of $12.84 billion and the previous $11.06 billion a year earlier.
The upbeat sales came as industry shipments of handsets slowly ticked up. The industry rebounded from the global chip shortage and the pandemic.
Consequently, smartphone shipments climbed 4.40% to 44.10 million units in the quarter. The firm stated that ensuring a steady supply of chips is still a challenge in the fiscal first quarter.
Nevertheless, Xiaomi highly expected that the situation would improve by June.
Then, China’s slowing handset demand, the business’s most prominent market, has prompted it to look for new opportunities.
The firm vowed to invest $10.00 billion in making electric cars over the next ten years. It hopes to bring the market by 2024.
In addition, it ramped up efforts in chips, releasing its first device with a self-developed image signal processor.
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