Xiaomi’s HK$20 Billion Buyback Fails to Lift Stock From Lows as EV Losses Top $5,600 Per Car

Xiaomi's record HK$20 billion share repurchase fails to halt selloff amid EV operating losses of $5,600 per car and a 43% profit plunge in its smartphone business.

Xiaomi’s biggest-ever share repurchase programme has failed to stem a selloff that has driven the stock to within a whisker of its 52-week low, as mounting losses in its electric-vehicle division and a profit collapse in the smartphone business rattle investor confidence.

The Chinese technology group launched a buyback of up to HK$20 billion on 2 June, scooping up 10.5 million Class-B shares for roughly HK$298 million on the first day alone. The move followed a predecessor programme that saw 399.6 million shares worth about HK$14.6 billion gobbled up. Yet the shares closed the week at €2.89 in Frankfurt — just 2.6 percent above the €2.82 trough — having shed 35.5 percent since the start of the year and roughly half their value over the past twelve months. The relative strength index of 32.6 points to oversold territory, but the technical signal has done little to coax buyers back.

Electric vehicle unit burns cash

The biggest drag on sentiment is the EV business, which racked up an operating loss of 3.1 billion yuan (around US$5,600 per delivered car) in the first quarter. That marks a sharp reversal after two quarters of near break-even performance, with the automotive gross margin sliding from 23.2 percent to 20.1 percent.

Management is sticking with its 2026 delivery target of 550,000 vehicles, even though after five months only 140,000 to 150,000 cars had left the factory. Monthly figures paint an uneven picture: the YU7 model sold 37,869 units in January but just 9,876 in April. Overall EV deliveries picked up to 36,702 in April — a 71.2 percent jump from March — and remained above 30,000 in May, but the company would still need to sustain a much higher pace through July and August to reach the goal. Analysts at Jefferies, which downgraded Xiaomi to “underperform” and cut its price target by 14 percent to HK$25.49, expect only 495,000 deliveries this year.

Smartphone margins under siege

The EV headache coincides with a brutal squeeze in Xiaomi’s core handset business. Contract prices for smartphone DRAM have quintupled, while TV memory costs have risen tenfold. With 62 percent of the company’s 2024 smartphone sales coming from models priced below US$200 — the segment most exposed to soaring component costs — margins are collapsing.

Jefferies forecasts a 11.6 percent industry-wide decline in smartphone shipments for 2026, and sees Xiaomi falling even harder, with a 15 percent drop. First-quarter results already reflect the pressure: total revenue slipped 10.9 percent year-on-year to 99.1 billion yuan, well below the 103.4 billion yuan consensus, while adjusted net profit tumbled 43.1 percent to 6.07 billion yuan. R&D spending, meanwhile, jumped 33.4 percent to 9.0 billion yuan, with a full-year target of around 40 billion renminbi.

New devices aim to reignite demand

Xiaomi is not standing still on the product front. In India, three smartphone launches are lined up for June: the Xiaomi 17T, the Redmi Turbo 5 and the Redmi 17 5G. The Redmi Turbo 5, due on 16 June, will pack a Dimensity 8500 Ultra chipset and a 7,560 mAh battery with 100-watt fast charging. Later in the year, the company plans to introduce the 18-series in China in September, powered by Qualcomm’s Snapdragon 8 Elite Gen 6 fabricated on TSMC’s 2-nanometre node. The Ultra variant has been paused due to rising component costs, but the standard and Pro models remain on schedule.

Whether those launches can shift the narrative is questionable. The stock remains more than 30 percent below its 200-day moving average, and even the record buyback has failed to generate a sustained bounce. For Xiaomi to regain credibility, the EV division must prove it can narrow losses and hit its delivery target — and the smartphone business needs to show that its margin goal of 8 percent is still achievable before memory prices are expected to ease late next year.