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Shares in Xiaomi dropped as much as 3.3% today shortly after the company’s co-founder and vice chairman announced plans to sell $2 billion worth of shares over the next four years to fund an investment initiative.
The company’s stock closed down 1.6% at HKD38.58 (approximately $5 USD). Earlier in the day, the stock fell 3.3% to HKD37.94 before rebounding into positive territory, reaching an intraday high nearly 2% higher.
Lin Bin is preparing to sell up to $500 million worth of Class B ordinary shares annually, starting in December next year, with a total cap of $2 billion, according to reports yesterday.
Following the announcement, Xiaomi’s stock experienced some volatility. However, since the sales won’t begin for another year, the short-term impact on the stock price is expected to be minimal, according to a securities strategist at Everbright Securities. He noted that tech stocks listed in Hong Kong tend to follow broader market trends, so future performance will largely depend on the overall economic environment.
Lin, who is 57 years old, co-founded Xiaomi with Chairman and CEO Lei Jun in 2010 and has served as president and vice chairman. Since Xiaomi’s IPO in Hong Kong in 2018, Lin has periodically sold shares. He previously liquidated about HKD370 million ($47.6 million) in August 2019, roughly HKD8 billion ($1 billion) in September 2020, and approximately HKD180 million last June.
As of June 30, Lin still held around 2.2 billion shares, representing 8.3% of the company’s total stock, based on the semi-annual report. This makes him the second-largest shareholder after Lei.
Lei, meanwhile, increased his stake in November by purchasing HKD100 million (about $12.9 million USD) of Xiaomi shares, acquiring an additional 2.6 million shares and raising his ownership to 23.3%. This purchase came after Xiaomi’s stock hit a nearly seven-month low of HKD36.62 (approximately $4.71 USD) during intraday trading on November 21.
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