Can Xiaomi’s Electric Vehicle Surge Offset Market Turbulence?

Xiaomi KYG9830T1067

Facing a precipitous decline in its market valuation, Chinese technology conglomerate Xiaomi has launched a substantial countermeasure on the stock exchange. The company's announcement of a multi-billion dollar share repurchase initiative aims to stabilize its equity, even as operational challenges from vehicle safety reports and component shortages create investor uncertainty. Amid these headwinds, however, the firm's nascent electric vehicle division is posting unexpectedly robust delivery figures.

In a direct response to a severe erosion of shareholder value, Xiaomi unveiled an automatic share buyback program last Thursday. The scheme is valued at up to HKD 2.5 billion (approximately USD 321 million). This move follows a staggering loss of about HKD 560 billion in market capitalization over a mere four-month period.

Prior to this latest announcement, the company had already been actively supporting its share price, deploying over HKD 7 billion to purchase its own stock in recent weeks. Market pressure persists, fueled by analyst projections of a tightening memory chip shortage in 2026, which is anticipated to significantly compress margins in Xiaomi's core smartphone business.

Operational Performance: A Tale of Two Realities

The current investor sentiment is decidedly mixed. On one side, negative developments are weighing on the outlook. Reports of two vehicle fires in January, coupled with the persistent supply chain constraints for critical components, have prompted downward revisions from research firms. Analysts at Bocom International and Huatai Securities, for instance, have lowered their price targets to HKD 50 and HKD 53.80, respectively.

Conversely, the electric vehicle segment is demonstrating remarkable momentum, outperforming expectations:
* Exceptional Demand: The updated SU7 model secured roughly 100,000 pre-orders within just 15 days of its launch.
* Pricing Power: This demand surge occurred despite a price increase of 14,000 yuan for the vehicle.
* Ambitious Targets: After delivering 411,800 units in 2025, Xiaomi has set an ambitious sales target of 550,000 vehicles for 2026.

This operational strength in its new business line was acknowledged in December by S&P Global Ratings, which revised its outlook on Xiaomi to "positive" while affirming its investment-grade credit rating.

The central narrative for Xiaomi investors now hinges on the stark contrast between its weak stock performance and the powerful sales trajectory of its EV division. The efficacy of the massive buyback program and any sustained recovery in the share price will likely be determined by the company's ability to navigate logistical hurdles and successfully hit its 2026 delivery goal of 550,000 units.