Xiaomi Corp. has gone from market darling to the worst-performing Chinese technology stock in just a few short months, and a quick comeback looks challenging amid headwinds in the smartphone and electric vehicle markets.
The feverish rally that had driven Xiaomi toward $200 billion in market capitalization as of June has rapidly faded. The Hong Kong-listed stock is down nearly 30% from a recent peak in September, ranking at the bottom on the Hang Seng Tech Index in that span.
Xiaomi was down 4%, below HK$40 on Wednesday in Hong Kong trading.
Xiaomi Corp. reported quarterly profit from its electric vehicle business for the first time, a major milestone for the smartphone maker’s ambitious foray into the crowded market.
The company’s EV division, which sold its first car last year, posted a profit of 700 million yuan ($98 million) in the September quarter. That reversed a loss of 300 million yuan in the previous three months, and helped the Beijing-based company more than double net income.
Xiaomi joins a select club of Chinese EV makers that actually make a profit. With a goal of becoming one of the world’s top five carmakers, the company is ratcheting up production to try and compete with the likes of Tesla Inc. and BYD Co. in China and eventually overseas. The company aims to start selling EVs in Europe in 2027.
While still early days, the result is a vindication of sorts for co-founder Lei Jun, who telegraphed the swing toward profitability earlier this year. The billionaire is riding high after a solid reception for Xiaomi’s first sports utility vehicle, which has garnered strong orders so far. On Tuesday, executives said the company will hit a 2025 target of 350,000 EV deliveries this week — more than a month ahead of schedule. It’s now ramping up efforts to boost deliveries and slash wait times.
Still, some investors have called Xiaomi’s longer-term outlook into question, citing intense competition, safety concerns and persistent factory delays.
Soaring demand and a production crunch have meant that buyers still have to wait up to nine months for some models after placing an order. In October, it said it shipped more than 40,000 EVs, the same figure it gave the previous month. And gross margins for the business will drop next year, executives said on Tuesday’s conference call.
What Bloomberg Intelligence Says
Xiaomi’s expectation for gross margin to narrow at its electric-vehicle business in 2026 — despite its SU7 and YU7 ranking among most popular EV models in China — underscores a more challenging outlook for the sector as a higher purchase tax kicks in next year. Domestic competition will intensify as demand growth slows. EV makers will become increasingly dependent on exports to drive volume and earnings growth, with BYD, Geely, Xpeng and Leapmotor setting the pace.
- Joanna Chen and Jason Zhao, analysts
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Xiaomi’s rivalry with Apple Inc. in its core smartphone business has also weighed on its shares. The company is battling for control of China’s high-end smartphone market after unveiling a $630 alternative to the iPhone 17 in September. But according to Counterpoint Research, iPhones accounted for one in every four smartphones sold in the country last month, and Xiaomi’s growth also lagged local rival Oppo.
Another source of uncertainty is rising memory chip prices. On Tuesday, Xiaomi said it expects a shortfall to push up mobile device prices next year, joining a growing number of companies in warning of a potential supply crunch of the critical component in 2026.
All that’s contributed to one of the worst-performances among Chinese technology stocks in just a few short months. Xiaomi’s share price has plummeted about 20% since May.