Shares of Xiaomi Corp. fell sharply on Wednesday after the Chinese technology company’s co-founder and vice chairman Lin Bin announced plans to sell up to USD2 billion worth of stock over the next four years to establish an investment fund.
Xiaomi’s Hong Kong-listed shares [HKG:1810] dropped as much as 3.3 percent intraday to HKD37.94 before recovering and closing down 1.6 percent at HKD38.58. The stock later rebounded into positive territory during the session, at one point rising nearly 2 percent.
Under the plan disclosed by the company on Tuesday, Lin will be permitted to sell up to USD500 million worth of Class B ordinary shares every 12 months starting in December next year, with a cumulative cap of USD2 billion.
Market participants said the announcement triggered short-term volatility, but the delayed timing of the sales should limit the immediate impact.
“Since the sell-off will not begin for another year, the short-term effect on the share price is likely to be limited,” Wu Lixian, an international securities strategist at Everbright Securities, told Yicai. “Hong Kong-listed technology stocks also tend to move in line with broader market trends, so future performance will largely depend on the macro environment.”
Lin, 57, co-founded Xiaomi with Chairman and Chief Executive Officer Lei Jun in 2010 and has served as president and vice chairman. Since Xiaomi’s Hong Kong listing in 2018, Lin has reduced his stake several times, selling about HKD370 million worth of shares in August 2019, around HKD8 billion in September 2020, and roughly HKD180 million in June last year.
As of June 30, Lin held about 2.2 billion shares, representing 8.3 percent of Xiaomi’s total share capital, making him the company’s second-largest shareholder after Lei, according to its semi-annual report.
Lei, meanwhile, increased his stake in November by purchasing HKD100 million worth of Xiaomi shares, adding about 2.6 million shares and raising his ownership to 23.3 percent. The purchase came after Xiaomi’s stock fell to an intraday low of HKD36.62 on Nov. 21, its lowest level in nearly seven months.
