Shorting Xiaomi is consensus among hedge funds, Goldman says

The smartphone and EV maker is set to report third-quarter earnings on Nov. 18, with revenue expected to grow 23% year-on-year, according to Bloomberg-compiled consensus

Hedge funds are ramping up bearish bets on Xiaomi Corp. as caution rises ahead of the Chinese firm’s earnings, according to Goldman Sachs Group Inc.

Short interest in Goldman’s prime book rose 53% over the past week, the bank’s sales desk wrote in a note on Wednesday. High-touch desk flows have also seen more selling over the past two weeks, led by pension and hedge funds, the note said.

Hedge funds’ feedback is that Xiaomi is “a consensus short/sell at least in the short term due to a lack of catalysts,” they wrote. Safety concerns, factory delays, and a lack of uptake in its electric vehicles despite recent promotions are weighing on sentiment.

Sentiment has sharply soured from earlier this year, when optimism in Xiaomi’s push into EV lifted shares. The stock has plunged more than 25% since a peak in early July, with a downward trajectory exacerbated by a fatal car crash last month.

Goldman analysts recently lowered their price target on the company by more than 10%, citing factors including margin pressure from the increased price of memory chips. The smartphone and EV maker is set to report third-quarter earnings on Nov. 18, with revenue expected to grow 23% year-on-year, according to Bloomberg-compiled consensus.