Xiaomi stock movement following earnings expectations beat

Josep Lago | AFP | Getty Images

Visitors test the new Xiaomi Mi 9 smartphone at the Mobile World Congress (MWC) in Barcelona on February 27, 2019.

Chinese smartphone maker Xiaomi saw its stock swoon during Wednesday trade despite posting a fourth-quarter earnings report that beat expectations the previous day.

In Wednesday’s trading session in Hong Kong, shares of Xiaomi dropped 4.59 percent.

That move came a day after Xiaomi announced quarterly earnings that bested expectations. That’s despite 2018 being the “worst year ever for smartphone shipments,” according to market research company IDC, with tech heavyweights such as Apple and Samsung Electronics all warning of weakening sales.

Xiaomi’s net profit for the fourth quarter more than tripled to 1.85 billion yuan (approx. $276 million), beating the 1.7 billion yuan average estimate of 10 analysts, according to Refinitiv data.

Still, revenue for the period increased 27 percent to 44.4 billion yuan, which was lower than the 47.4 billion yuan average estimate of 13 analysts, according to Refinitiv data.

In an interview with CNBC’s “Squawk Box” ahead of the market open on Wednesday, Xiaomi CFO Shou Zi Chew attributed the company’s fourth-quarter performance to keeping efficiency at “a very high level.”

“Our entire operating expense for the year 2018 was still below 10 percent of our revenue and what we have done is, you know, we kept forcing ourselves to be more efficient as a company and return the savings to our users,” Chew said. “This is the reason why we were successful in 2018 and this is the reason why we will be successful going into the future.”