A School Ban and a Buyback: Xiaomi's Stock Struggles on Two Fronts

Xiaomi shares drop 63% in a year, trading near a 52-week low of €2.34. A massive buyback and new product launches aim to counter selling pressure, but a Chinese college ban and supply chain headwinds weigh.

Xiaomi is fighting a war on two fronts. At the corporate level, management has authorised a massive share repurchase — brokers are to buy up to 4 billion B-class shares under an existing 20-billion-Hong-Kong-dollar framework. On the ground, however, the news cycle keeps landing blows. The latest: a Chinese college in Guangzhou has barred all Xiaomi electric vehicles from its campus, citing an internal directive from the school administration. Other brands, including US rival Tesla, are still allowed entry with prior notice. The move has sparked outrage on Chinese social media, with users accusing the institution of discriminating against a domestic manufacturer.

The stock itself is in free fall. Since the start of the year, Xiaomi's shares have surrendered 45% of their value, and over the past twelve months the decline has deepened to 63%. On Friday, the stock closed at €2.46, just a whisker above the 52-week low of €2.34. The Relative Strength Index has plunged to 19.8 — a level far below the conventional oversold threshold of 30, signalling that selling pressure has reached exhaustion by historical standards. The coming session on Monday will be critical: the €2.34 support level will be tested directly, and a breach could trigger another wave of liquidation.

Lei Jun is not waiting passively. The low valuation offers a window for the buyback to absorb supply, and the CEO has made it clear that the programme is aimed at reducing the float and cushioning the slide. The question is whether the sheer volume of the buyback can offset the technical damage.

Operationally, there are bright spots. The new 17T smartphone series moved 103,500 units in its first week, bucking a cautious note from Goldman Sachs on rising chip costs. Over the weekend, Xiaomi also unveiled a fresh batch of smart-home devices: a vacuum robot with 10,000 Pa of suction for around €215, and two refrigerator models with 186 and 216 litres of capacity respectively. These launches show that the core product machine is still humming.

The broader market backdrop remains punishing. Memory prices are climbing month after month, CPUs and GPUs are in short supply, and Apple has already raised Mac prices in China by up to 33%. Xiaomi is leaning on its partnership with MediaTek to soften the blow from these input cost surges.

The automotive arm, meanwhile, is being prepared for a long haul. Lei Jun stressed over the weekend that quality control is paramount; the vehicle test team now numbers more than 800 specialists. The college ban in Guangzhou may be a minor embarrassment, but it underscores the brand perception hurdles Xiaomi still faces as it pushes into the EV space.

For traders, the key level remains €2.34. If that holds, the buyback combined with oversold technicals could engineer a bounce. If it breaks, the sell-off has room to run regardless of management's market support efforts.