HONG KONG (BLOOMBERG) - Many Xiaomi Corp investors, who could only watch as the stock shed US$14 billion in market value, were finally able to join in on the selling. The result was painful.

Xiaomi shares dropped to HK$10.58 from a listing price of HK$17, after falling another 4.7 per cent by 1:17pm local time.

Expiring Wednesday was the six-month lockup period that followed the company's Hong Kong debut, during which some employees and cornerstone investors were banned from disposing of their allocated shares.

More than 3 billion shares were unlocked, equal to about 19 per cent of those outstanding, according to data compiled by Bloomberg. The lockup period for controlling shareholders - such as chairman and founder Lei Jun - was extended Wednesday for another 365 days, Xiaomi said in a statement. It was previously due to expire in July.

Touted by bankers last year as China's answer to Apple Inc, Beijing-based Xiaomi sought a valuation that would have made it the most expensive smartphone maker in the world. The stock trades at 17 times projected 12-month earnings, less than half its July multiple. It's still 37 per cent more expensive than Apple, which is reeling from its worst quarterly rout in more than a decade.

To be sure, longer-term investors may want to hold on to Xiaomi's shares rather than dump them at a loss. Analysts on average still predict Xiaomi will rebound to its IPO price. Hedge funds have been increasing their bearish bets, with almost 30 million shares sold short Tuesday, the most since August.

Xiaomi attracted the likes of China Mobile Ltd and US wireless-chip giant Qualcomm Inc as cornerstone investors last year.