Just as the auto industry was grappling with BYD ‘s rapid rise, Chinese smartphone company Xiaomi has burst into the market — undercutting Tesla and vowing to become a global player. Even as Apple this year scrapped development of an electric, self-driving car , Xiaomi’s founder and CEO Lei Jun pledged that making a car will not only be his final legacy project, but a product that turns the company into one of the top five automakers in the world in the next two decades. Xiaomi’s Hong Kong-listed shares soared last week to a two-year high after the company introduced its electric SU7 sedan at a price about $4,000 cheaper than Tesla’s Model 3 — and with similar tech capabilities. Wider analyst attention In the last several days, Xiaomi has gained wider attention from auto and tech industry analysts beyond those who previously covered it as only a smartphone play. “Add Xiaomi to the list of capable China auto/tech firms that may represent attractive collaboration candidates as Western legacy auto firms look for ways to achieve higher scale, improved capital discipline and lower execution risks,” Morgan Stanley auto analyst Adam Jonas said in a note Thursday. Meanwhile, Tesla last week revealed that its deliveries fell in the first quarter from a year ago . Excluding Covid, that was the first decline in Tesla deliveries since 2012, Jonas pointed out. While he still likes Tesla longer-term , he and his team will hold a client webinar on Xiaomi, Tesla and global EVs on Tuesday. “If Xiaomi can continue to outperform peers on [driver assist] and smart cabin features, we believe it is likely to become a disruption force with large growth potential,” Morgan Stanley’s greater China tech hardware analyst, Andy Meng, said in a note Monday. Meng reiterated the bank’s overweight rating on Xiaomi, and its price target of 17.50 Hong Kong dollars ($2.24). Xiaomi shares nearly reached that price during last week’s surge. The stock later gave back much of those gains, and are now little changed on the year. Meanwhile, Tesla shares are down 34% year to date. On Wednesday, Xiaomi said it had received more than 100,000 orders for the SU7, more than 40,000 of which were already locked in and not subject to cancellation. The same day, it held a ceremony celebrating its first batch of car deliveries. Six-month wait times Most customers face wait times of nearly six months or longer, according to Xiaomi’s online sales platform. Taylor Ogan, Shenzhen-based CEO of Snow Bull Capital, said that he’s watching to see how consumers actually like driving the car before he commits to buying Xiaomi shares. “I don’t think it will do particularly well for the stock price [in] the next two quarters,” he said in an interview Friday. “After that, this could be a cash cow. This is something that every single avid Xiaomi ecosystem user needs.” Months ahead of the car launch, Xiaomi announced a new operating system called HyperOS and a strategy to connect consumers with their homes and cars. The company makes most of its revenue from smartphones, but a significant share also comes from a range of home appliances, many of which are controlled using an app. During the recent SU7 launch, Xiaomi CEO Lei touted that when a driver neared home, connected lights and appliances could automatically turn on to pre-determined settings. Such an ecosystem offers “a built-in recurring revenue model that every CEO would dream of,” Ogan said. “On top of that, you can have subscriptions.” He said he sees low odds that the SU7 flops, but said it would be difficult for Xiaomi to recover if the car does disappoint expectations. Although Xiaomi is trying to build out its own ecosystem, the company also supports Apple’s Car Play system and iPads. “We believe the ultimate outcome [of Xiaomi’s EV market entry] would be a faster BEV/NEV penetration in China, thus ICE brands or products would be the main losers,” JPMorgan’s Nick Lai, head of China equity research and head of APAC auto research, said in a note Monday. He was referring to internal combustion engines, battery electric vehicles and new energy vehicles. Recognition and cash Xiaomi’s advantages include existing brand recognition in China, and 110 billion yuan ($15.7 billion) in cash on its balance sheet that can help the company weather a near-term price war, the report said. Lei has said that Xiaomi is currently producing each car at a loss, but noted the company invested in its own factory to boost production. It’s not clear whether the facility is fully operational yet, but Lei claimed last month the factory could churn out an SU7 every 76 seconds in a nearly fully-automated process. “Xiaomi also showcased its EV factory with highly automated production lines for key processes (painting, stamping, die casting, body assembly etc.), backed by its smart manufacturing expertise. We believe high degree of automation should help accelerate its EV profitability improvement in the mid to long term,” JPMorgan technology analyst Gokul Hariharan said in a separate note. The bank has an overweight investment recommendation on Xiaomi, with a price target of 21 Hong Kong dollars. That’s about 35% above where the stock closed Friday. One risk is China’s ability to produce electric cars at prices far below overseas competitors has prompted warnings that trade tensions will grow. Only Friday, U.S. Treasury Secretary Janet Yellen emphasized concerns about China’s overcapacity as she kicked off high-level meetings in the country. But while Xiaomi has hinted at overseas car plans, it has promised to focus on the China market first. Right now, it sells smartphones globally, but not in the U.S.
Former Walmart U.S. CEO Bill Simon contends the retailer’s stock sell-off tied to a slowing profit growth forecast and tariff fears is creating a major opportunity for investors.
“I absolutely thought their guidance was pretty strong given the fact that… nobody knows what’s going to happen with tariffs,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal fourth-quarter results.
But even if U.S. tariffs against Canada and Mexico move forward, Simon predicts “nothing” should happen to Walmart.
“Ultimately, the consumer decides whether there’s a tariff or not,” said Simon. “There’s a tariff on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no tariff?”
Plus, Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands, sees Walmart as a nimble retailer.
“The big guys, Walmart,Costco,Target, Amazon… have the supply and the sourcing capability to mitigate tariffs by redirecting the product – bringing it in from different places [and] developing their own private labels,” said Simon. “Those guys will figure out tariffs.”
Walmart shares just saw their worst weekly performance since May 2022 — tumbling almost 9%. The stock price fell more than 6% on its earnings day alone. It was the stock’s worst daily performance since November 2023.
Simon thinks the sell-off is bizarre.
“I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust,” he said. “I don’t know how you could have done much better for the quarter.”
It’s a departure from his stance last May on “Fast Money” when he warned affluent consumers were creating a “bubble” at Walmart. It came with Walmart shares hitting record highs. He noted historical trends pointed to an eventual shift back to service from convenience and price.
But now Simon thinks the economic and geopolitical backdrop is so unprecedented, higher-income consumers may shop at Walmart permanently.
“If you liked that story yesterday before the earnings release, you should love it today because it’s… cheaper,” said Simon.
Walmart stock is now down 10% from its all-time high hit on Feb. 14. However, it’s still up about 64% over the past 52 weeks.
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Investors may want to reducetheir exposure to the world’s largest emerging market.
Perth Tolle, who’s the founder of Life + Liberty Indexes, warns China’s capitalism model is unsustainable.
“I think the thinking used to be that their capitalism would lead to democracy,” she told CNBC’s “ETF Edge” this week. “Economic freedom is a necessary, but not sufficient precondition for personal freedom.”
She runs the Freedom 100 Emerging Markets ETF — which is up more than 43% since its first day of trading on May 23, 2019. So far this year, Tolle’s ETF is up 9%, while the iShares China Large-Cap ETF, which tracks the country’s biggest stocks, is up 19%.
The fund has never invested in China, according to Tolle.
Tolle spent part of her childhood in Beijing. When she started at Fidelity Investments as a private wealth advisor in 2004, Tolle noted all of her clients wanted exposure to China’s market.
“I didn’t want to personally be investing in China at that point, but everyone else did,” she said. “Then, I had clients from Russia who said, ‘I don’t want to invest in Russia because it’s like funding terrorism.’ And, look how prescient that is today. So, my own experience and those of some of my clients led me to this idea in the end.”
She prefers emerging economies that prioritize freedom.
“Without that, the economy is going to be constrained,” she added.
ETF investor Tom Lydon, who is the former VettaFi head, also sees China as a risky investment.
“If you look at emerging markets… by not being in China from a performance standpoint, it’s provided less volatility and better performance,” Lydon said.
Warren Buffett’s Berkshire Hathaway raised its stakes in Mitsubishi Corp., Mitsui & Co., Itochu, Marubeni and Sumitomo — all to 7.4%.
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Warren Buffett released Saturday his annual letter to shareholders.
In it, the CEO of Berkshire Hathaway discussed how he still preferred stocks over cash, despite the conglomerate’s massive cash hoard. He also lauded successor Greg Able for his ability to pick opportunities — and compared him to the late Charlie Munger.