Hesai Group (NASDAQ: HSAI) saw its stock price plummet by 5.36% in pre-market trading on Tuesday, despite reporting better-than-expected earnings for the first quarter of 2025. The significant drop appears to be driven by the company's substantial revenue miss and concerns about future growth.

The Chinese lidar technology company reported adjusted earnings of $0.01 per share for Q1, surpassing analyst expectations of a $0.13 per share loss. This represents a notable improvement from the $0.08 per share loss reported in the same period last year. However, Hesai's quarterly sales of $72.39 million fell far short of the analyst consensus estimate of $532.16 million, missing the mark by a staggering 86.40%.

While Hesai Group did show year-over-year revenue growth of 45.54%, the massive shortfall compared to analyst expectations seems to have spooked investors. The company's Q2 revenue guidance of 680 million to 720 million renminbi (approximately $95.5 million to $101.1 million) also failed to reassure the market, as it barely meets the lower end of a single analyst's expectation of 680.5 million renminbi. The combination of the revenue miss and conservative guidance likely contributed to the sharp decline in Hesai's stock price, overshadowing the positive earnings surprise.