Xiaomi's 20 Billion HKD Buyback Fails to Shore Up Stock as EV Losses Swell and Chip Costs Bite

Xiaomi accelerates share repurchases to 20 billion HKD but stock nears 52-week low. EV division bleeds 3.1B yuan in Q1, while smartphone margins face cost pressure from AI-driven chip prices.

Xiaomi is trying to buy its way out of a deepening stock rout—so far with limited success. The Chinese electronics and electric vehicle maker has accelerated share repurchases, snapping up 3.6 million shares on Monday alone for roughly 98 million Hong Kong dollars. That brings the total firepower of its latest buyback program, launched on June 2, to as much as 20 billion HKD, replacing a previous scheme under which Xiaomi had already repurchased around 14.6 billion HKD worth of equity.

Yet the stock continues to hover dangerously close to its 52-week low. Shares changed hands at EUR 3.01 on Tuesday, just 1.35% above the trough of EUR 2.95 touched on June 5. The decline from the June 2025 high of EUR 6.69 now exceeds 55%, and the year-to-date loss stands at roughly 33%. Technical indicators underscore the severity: the relative strength index sits at 35.7—edging into oversold territory—while the stock trades nearly 30% below its 200-day moving average of EUR 4.29.

The fundamental headwinds are twofold. First, Xiaomi's electric vehicle division is bleeding cash at an alarming rate. In the first quarter of 2026, the EV segment posted an operating loss of 3.1 billion yuan on revenue of 19.9 billion yuan. That marks a sharp reversal from the prior year, when the unit briefly turned a profit. The company delivered 80,856 vehicles in Q1, a 6.6% increase year on year, but volume growth is outpacing margin improvement. Xiaomi's factory in Beijing now churns out a car every 76 seconds, powered by over 700 robots and an automation rate above 90% in key areas. Still, the bottom-line damage is hard to ignore. For the full year, management is targeting 550,000 deliveries, a goal that hinges on expanding capacity in both Beijing and Wuhan.

Second, the core smartphone and laptop business is caught in a component cost squeeze. Rising prices for semiconductors and memory chips—fueled by the global AI boom—are eating into gross margins. Xiaomi's response has been to bake more artificial intelligence features into its device ecosystem, hoping to justify higher selling prices. Whether that strategy can offset the cost pressure remains an open question.

Meanwhile, the company's headline financials reflect the strain. First-quarter revenue fell nearly 11% year on year to 99.1 billion yuan, while diluted earnings per share dropped from 0.42 yuan to 0.18 yuan. Goldman Sachs has nevertheless maintained a buy rating, pointing to the long-term promise of Xiaomi's AI development and its transformation from a pure hardware vendor into an integrated tech conglomerate with an EV arm.

The market's verdict may hinge on the next earnings release, scheduled for August 26, 2026. Until then, the buyback program represents Xiaomi's most visible tool for defending the EUR 3.00 level—but the speed of the repurchases has yet to convince investors that the stock has found a true floor.