Finimize - 📉 Xiaomi loses out to Apple

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Today's big stories

Chinese smartphone maker Xiaomi posted a drop in quarterly revenue
The dollar has been rallying in the past year, and it might be exactly what your portfolio needs – Read Now
EasyJet gave an upbeat update as travel demand continues to pick up

Stage Freight

What’s Going On Here?

Chinese electronics giant Xiaomi reported its first quarterly drop in revenue on record on Thursday.

What Does This Mean?

The entire smartphone industry is already being pummeled by a lethal mix of shortages, European war, and dwindling consumer confidence. But China’s smartphone makers have had another challenge to contend with in the form of Covid lockdowns, which have reduced both production and demand to rubble. That led Xiaomi to ship 18% fewer smartphones last quarter than the same time in 2021, and its sales to fall around 5%. Not ideal, given that it’s now lost even more ground to market leaders Samsung and Apple. And even if lockdowns do ease up, analysts think higher costs could leave the company struggling to get profitability anywhere near last year’s lofty heights. Investors said thanks, but no thanks: they sent its stock down 5%

Why Should I Care?

The bigger picture: Xiaomi needs a breath of fresh air.
Xiaomi’s smartphone business makes up around 60% of its total sales, so it follows that this slowdown has it looking to other segments to pick up the slack. It’s been putting more emphasis on smart TVs, tablets, and laptops, which have long been staples on its shelves. But it’s also trying to boost sales of its digitally connected devices: think doorbells and obnoxiously expensive air conditioners.

Zooming out: Does Xiaomi dream of electric vehicles?
Xiaomi has irons in the EV fire too: the company committed last year to investing $10 billion in the space, and announced plans to launch its first vehicle by 2024. If that happens, Xiaomi will be going head to head with established carmakers like Hyundai. That’s no mean feat: the carmaker said this week that it’ll be spending nearly $17 billion to boost production in South Korea, taking it from 350,000 EVs a year to 1.4 million by 2030 (tweet this).

You might also like: What investors are getting wrong about the EV market right now.

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Analyst Take

The Dollar Could Lift Up Your Portfolio

Stéphane Renevier, Analyst

Plenty of markets have fallen in the past year, but the US dollar isn’t one of them.

The greenback is up 15% from a year ago, as investors have scrambled for the refuge of the safe haven. And that rally’s showing no signs of letting up.

That’s not great news for the global economy: a stronger dollar is boosting inflation abroad, forcing central banks to hike interest rates even more than they might’ve done otherwise.

But while it could ultimately end up tipping the economy into recession, it could also be the asset your portfolio needs to survive it.

So that’s today’s Insight: why the dollar could be the disease and the cure.

Read or listen to the Insight here

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What’s Going On Here?

EasyJet announced on Thursday that its sales more than quintupled in the first half of its financial year, even as the discount airline runs short on crew.

What Does This Mean?

You have had itchy feet: EasyJet flew more than five times as many passengers in the last six months as it did the same time the year before, and its revenue rose in kind. And while the airline was reluctant to commit to a forecast since customers are delaying bookings till closer to departure, it did say that it’s expecting a strong summer. In fact, the company said it’s aiming to operate 90% of its 2019 capacity this quarter. It’s made a good start: sales over the past 10 weeks were 6% ahead of pre-pandemic levels, giving it some breathing room if the backdrop starts to turn.

Why Should I Care?

Zooming in: Petty vandalism is the answer.
EasyJet’s bumper comeback might’ve been even better too, if it hadn’t been forced to cancel a bunch of flights on the back of staff shortages. And for once they’re not just Covid’s fault: the company’s been struggling to recruit enough workers to keep up with resurgent demand. Its solution: rip seats out of its planes, so fewer members of cabin crew are needed to meet code.

The bigger picture: Customers will make sacrifices.
You’d think that the prospect of an economic slowdown would put a damper on airlines’ spirits, but Ryanair – which posted similarly strong results on Monday – is actually looking forward to it. The Irish carrier’s theory is that people don’t actually stop flying when there’s a recession: they just want to save more. And if the only way to do that is to spend 90 minutes with their nose pressed up against the seat in front of them, so be it.

You might also like: The highs and lows of investing in the airline industry.

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💬 Quote of the day

“If a cluttered desk is a sign of a cluttered mind, of what, then, is an empty desk a sign?”

– Laurence J. Peter (a Canadian educator)

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🤔 Q&A · RE: Inflatable You

Q: “Why is the UK’s inflation worse than the rest of the G7?”

– From Louis in Spain

A: “It’s a combination of things, Louis. Firstly, the UK is less self-sufficient than, say, France: it imports more energy than it exports, meaning it’s more exposed to the price surges we’ve seen. Secondly, it’s done less to protect consumers from higher fuel bills, cutting fuel tax by just 5p a liter compared to Germany’s 25p. Thirdly, Brexit: trade barriers alone are estimated to have pushed up food prices by 6% between December 2019 and September 2021. It’s also made it harder for foreign workers to get jobs in the UK, leading to more severe worker shortages and forcing companies to increase wages – and in turn their own prices – to attract talent. On top of all that, the pound has slumped in the last few months, making it more expensive to import goods. And breathe.”

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🌎 Finimize Live

🎉 Coming Up This Week

All events are in UK time.

♻️ How To Pick Winning ESG Stocks: 5pm, May 20th
🧐 A Guide To Investing In Derivatives: 6pm, May 23rd
📈 How To Invest Thematically: 12pm, May 24th
🎨 How To Build And Manage A Balanced NFT Portfolio: 5pm, May 24th
⚡️ How To Invest In The EV Revolution: 1pm, May 25th
😎 The Blockchain And Real Estate Revolution: 6pm, May 25th
📈 The Future Of The M&A Market: 5pm, May 26th

💪 And Then After That…

📱 How To Hedge Against The Chip Shortage: 1pm, May 30th
📉 A Guide to Automated Crypto Trading: 6pm, May 30th
♻️ How Green Bonds Can Fuel A Sustainable Future: 1pm, May 31st
🏆 Peer-To-Peer Vs. Crypto Exchanges: 5pm, May 31st
🎉 De-Mystifying Refi: 5pm, June 1st
🌿 How To Get The Green With Cannabis ETFs: 12pm, June 9th
🎮 How To Invest In Video Games: 5pm, June 9th
🌍 How And Where To Invest In Africa: 5pm, June 14th
🚀 Finimize NFT Fest: 12pm, 15th June
🤗 Investing In Metaverse Opportunities: 5pm, 23rd June
🏘 How To Diversify Your Crypto Investments Through Commercial Real Estate: 6pm, August 3rd
🏡 Tokenizing Real Estate: 6pm, September 13th

🎯 On Our Radar

Talk about a beach view. This house got more than its fair share of the ocean.
Amazon has some new partners. They’ve popped up in the least likely of places.
Lewis Hamilton has skills. More importantly, he has style.
Stars will sell anything. They’ll even put their name on a burger.
Life is too crazy these days. Surfing could remind us to slow down.

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