Hesai Group's stock fell sharply by 5.72% during Tuesday's intraday trading session. The decline follows the company's release of its first-quarter 2026 financial results and second-quarter revenue outlook.

The lidar technology company reported Q1 net income of RMB18.3 million, swinging to profitability from a loss in the prior-year period, with revenues growing 29.6% year-over-year to RMB680.6 million. However, investors appeared focused on the company's gross margin, which contracted to 39.1% from 41.7% a year ago.

Additionally, Hesai provided Q2 revenue guidance of RMB850-900 million, representing year-over-year growth of 20-27%. This projected growth rate represents a deceleration from the 29.6% growth achieved in the first quarter, potentially contributing to the negative market reaction despite positive developments including a strategic partnership with Mercedes-Benz for L3 autonomous driving models.