Xiaomi stockIt looks like you won’t be able to buy Xiaomi stock for quite a while as the company is currently privately owned and the CEO has stated that an IPO may not come until 2025. Lei Jun started Xiaomi in 2010 and is most recently quoted as saying that he believes it will take the company 15 years before it can successfully go public. That would put the IPO date at 2025 which means investors will have a long wait ahead.

Being a private company means you can’t directly invest in Xiaomi right now and will have to wait for it to go public. You will need to have a funded online broker account in order to be able to buy its stock if it does eventually IPO. What exchange Xiaomi decided to list on (a Chinese, Hong Kong, or American stock exchange) may also affect your ability to purchase stock shares.

What Products Does Xiaomi Make?

Most famous for its low cost – high quality smart phones, Xiaomi is often referred to in the media as “China’s Apple”. That is why so many people want to buy the stock, in hopes that the company can someday approach the kind of success Apple has had. However, almost all their sales are done online in China and the company has just started making some of their products available in the United States.

If you go to the Xiaomi website (November 2016), the only products you can buy online Internationally are the in-ear headphones, the over-the-ear headphones, the power bank, a small fan, and the Mi Box. The selection of smart phones and smart devices are not for sale yet. The Mi Box is a direct competitor to the Amazon Fire Stick, Apple TV, Roku, and Google Chromecast and is Xiaomi’s first product that it being introduced into the United States.

It is presumed that at some future date Xiaomi will start bringing more of its products to U.S. and International consumers. The fitness bands are inexpensive and well made according to some reviews and will probably be the next product to be available. But investors will be waiting for the eventual introduction of the lineup of Mi phones which will get a lot of news coverage when they finally make the jump into the U.S. market.

Xiaomi May Be In Trouble

Because Xiaomi has so much private funding, the company was thought to be valued at between $45 and $46 billion. With the cash it has been able to get from private investing groups, the company has never felt the need to rush to go public like some startups do.

But has everything changed?

According to some reports (here and here), Xiaomi has encountered some very rough times in recent months which has dropped its valuation significantly. Competition has come from other Chinese phone manufacturers that have released phones that are at least just as good and maybe even better. This has put a dent in Xiaomi’s latest sales numbers and leaves serious doubts into its future IPO plans.

Brand loyalty has become an issue with Xiaomi as its phones don’t have any sticky ecosystem or any other reason to prevent Chinese customers from switching to other manufacturers. Additionally, Xiaomi’s desired worldwide expansion of its phone lineup has not happened yet and it may have to delay such plans if the company can’t turn things around in China first.

Will There Ever Be A Xiaomi IPO?

One of the biggest problems the company faces and one that anyone wanting to buy Xiaomi stock should consider is the razor thin margins it gets from all products. Its the thing that made Xiaomi famous (quality at a cheap price) and ironically it could eventually be its downfall.

This profit margin of error is so little that any hiccup in product production or sales can seriously impact the company going forward. Its great to offer quality products at a cheap price but that leaves a company like Xiaomi very vulnerable when the slightest thing goes wrong. Xiaomi initially grew at such an astounding pace and got so much positive publicity that the company might have underestimated the long term obstacles is could or would face.

Xiaomi may indeed have an IPO in 2025 or sooner but right now investors will have to take a wait and see approach. Even if the company did IPO sooner than later, it seems like it would be prudent for any investor to be very cautious before buying its stock and have a full understanding of the challenges ahead for Xiaomi.