Xiaomi Shares Face Pressure from Co-Founder’s Planned Stake Sale

Xiaomi's stock came under selling pressure on Monday, diverging from a generally positive broader market trend. The weakness was triggered by an announcement from Lin Bin, the company's Vice Chairman and co-founder, regarding his intention to sell a multi-billion dollar stake. In response, the smartphone maker initiated a substantial share buyback, raising questions about its ability to maintain investor confidence.

The equity closed at HKD 38.58 on the Hong Kong exchange, marking a 1.6% decline. Losses deepened intraday, at one point reaching 3.3%. This performance was notably at odds with the supportive market backdrop, as the benchmark Hang Seng Index advanced 0.7% to approximately 25,935 points.

Lin Bin disclosed plans to divest shares worth up to USD 2 billion. The primary stated purpose for the proceeds is to fund a new investment vehicle.

Key elements of the sales framework:

• Transactions cannot commence before December 2026.
• A maximum of USD 500 million in shares may be sold within any 12-month period.
• A lock-up period is in effect until the end of 2026.
• The sale involves both Class A and Class B shareholdings.

Despite this long-term, phased approach, the market reaction was negative. The sheer scale of the proposed sale has weighed on near-term sentiment, even though the actual transactions are years away.

Should investors sell immediately? Or is it worth buying Xiaomi?

Company Response Through Buyback Program

In a clear countermove, Xiaomi's management authorized the repurchase of 3.9 million of its own Class B shares on Monday. The total value of these transactions was HKD 150.6 million.

This action is part of a broader strategy to mitigate the share price depreciation observed since the autumn of 2025. The board aims to signal its belief in the company's current valuation and to limit potential dilution effects.

Investor Sentiment at a Crossroads

The stock is currently caught between two opposing forces. The announced insider sale, regardless of its stated rationale, is perceived as an overhang. Conversely, the active buyback program demonstrates the company's commitment to operational support for the share price.

Technical support at the HKD 38 level will be a critical focus for traders in the coming sessions. On the product front, the recently launched Xiaomi 17 Ultra continues to garner positive reviews. The premium smartphone, featuring a 200-megapixel periscope zoom lens and the Snapdragon 8 Elite chipset, positions itself as a direct competitor to devices like the Vivo X300 Pro. Whether these fundamental strengths can offset the prevailing selling pressure will become clearer as the year draws to a close.