Xiaomi's Multifront Struggle: Share Buybacks and Market Pressures

Xiaomi confronts declining smartphone sales, a key legal battle in India, and uses aggressive share buybacks to support its falling stock price amid investor concerns.

The Chinese technology giant Xiaomi is confronting a deepening downturn on multiple fronts. As the company's leadership deploys financial measures to support its stock price, it simultaneously faces legal challenges in a key market and concerning declines in its core smartphone business. The central question for investors is whether these defensive financial maneuvers can offset fundamental operational weaknesses.

Core Business Shows Signs of Strain

Perhaps the most pressing issue lies in Xiaomi's primary operations. Recent market data reveals a slowdown in the growth narrative that has long supported the company's valuation. According to Counterpoint Research figures for the fourth quarter of 2025, Xiaomi maintained its position as Europe's third-largest smartphone vendor, behind Apple and Samsung, with a 16% market share. However, this came alongside a 6% year-over-year decline in unit sales for the region. The global picture was more severe, with shipments falling by 11%. Industry observers attribute this softening demand to newer smartphone models failing to capture the same consumer enthusiasm as previous generations and a perceived weakening in customer loyalty.

Legal Headwinds in a Critical Market

Compounding these operational challenges is a significant legal dispute in India, one of the world's most crucial mobile phone markets. Xiaomi has escalated a matter to the Indian Supreme Court concerning customs duties levied on royalty payments. The corporation contends that the tax authorities' stance threatens established manufacturing practices within the country. The final ruling in this case carries substantial implications for the profitability and margin structure of Xiaomi's Indian operations.

Aggressive Buybacks Attempt to Stem the Tide

In response to sustained share price erosion, Xiaomi's management has initiated a series of substantial share repurchases. The latest transaction, reported on February 24, involved buying back 2.8 million Class B shares for a total of 100 million Hong Kong dollars. This move is part of a broader pattern of support measures undertaken in recent weeks.

A glance at the stock chart underscores the urgency behind these actions. The shares are currently trading around €3.87, hovering near their 52-week low. On a year-to-date basis, investors have witnessed a loss exceeding 44% in value. The stock now trades approximately 25% below its 200-day moving average, a technical indicator that reinforces the persisting long-term downward trend.

The confluence of aggressive financial engineering and underlying business softness paints a complex picture for Xiaomi. While buybacks may provide temporary price support, a sustained recovery in the equity value likely hinges on reversing the negative sales trajectory through successful new product launches, rather than financial interventions alone.