Xiaomi’s Price War and Premium Phone Launch Can’t Arrest a 26% Stock Decline Ahead of Key Earnings

Xiaomi slashes YU7 SUV price to undercut Tesla's Model Y in China, launches premium Xiaomi 17 Max with Leica camera, but stock remains down 26% in 2026 ahead of Q1 earnings.

Xiaomi is fighting on two fronts: slashing prices on its electric SUV to undercut Tesla while pushing into the premium smartphone segment with a Leica-toting flagship. Yet the market remains unmoved, with the stock languishing at €3.30 — a 26% drop since the start of 2026 and roughly 46% below its 12-month high. All eyes now turn to the first-quarter earnings release due on May 26, where the real test of margins will take centre stage.

The Hong Kong-listed shares fell modestly on Friday even as the company announced a share buyback on May 21, purchasing 3.3752 million class B shares for just under 100 million HKD. The move signals board-level confidence in the current valuation, but it has done little to halt the slide. The stock now sits well below its 200-day moving average of €4.44, and the relative strength index of 75.8 points to short-term overbought conditions — a technical warning that expectations for the upcoming results are already elevated.

Price aggression is most visible in Xiaomi’s electric vehicle gambit. Founder Lei Jun unveiled the pricing for the YU7 electric SUV at a Beijing event, positioning the base version at 233,500 Yuan (roughly €29,800). That places it squarely below Tesla’s Model Y in China. Lei Jun acknowledged the company still has ground to make up in many technical categories, but the immediate lever is clear: a lower entry price combined with the ecosystem tie-ins that Xiaomi’s smartphone, smart home and automotive divisions offer.

That ecosystem is also getting a hardware refresh. The headline launch from the May 21 event in China is the Xiaomi 17 Max, set to hit store shelves on May 25. The flagship device packs a 6.9-inch display with a 120Hz refresh rate and 3,500 nits peak brightness, powered by an 8,000 mAh battery that charges at 100W wired. The camera system is built around a Leica 200-megapixel main sensor, a 50-megapixel periscope telephoto lens and an equivalent ultra-wide module. After government subsidies, the starting price is 4,299 Yuan, rising to 4,799 Yuan without the subsidy.

Alongside the phone, Xiaomi launched the Smart Band 10 Pro, a fitness tracker priced between 399 and 479 Yuan with a 1.74-inch AMOLED display, up to 21 days of battery life and sensors for heart rate variability and blood oxygen levels. The company also introduced its first clip-on earbuds, featuring 11mm drivers and up to 38 hours of total playback. These are not mere accessories: the Smartphone × AIoT segment accounted for 351.2 billion Yuan in 2025 revenue, nearly 77% of the group’s total top line. Xiaomi’s narrative has shifted from a phone maker to a connected-device ecosystem.

Yet the smartphone business itself remains under margin pressure. In 2025, the gross margin on handsets slipped from 12.6% to 10.9%, squeezed by lower subsidies in China, costlier components in the second half and intensifying global competition. Total smartphone revenue came in at 186.4 billion Yuan on shipments of 165.2 million units. The Xiaomi 17 Max is intended to push back against that trend by capturing higher price points, but whether Xiaomi can actually command a premium in the market is an open question.

To strengthen its hand longer term, Xiaomi plans to plow at least 200 billion Yuan (about €25.5 billion) into research and development during the new planning period — nearly double the 105.5 billion Yuan spent in the previous cycle. The money will go toward proprietary chips, the HyperOS operating system and cross-category artificial intelligence features. Vertical integration is the goal: less reliance on external suppliers could eventually protect margins, but the upfront investment is enormous and will pressure near-term profitability.

The dual strategy of aggressive EV pricing and premium phone positioning is already weighing on investor sentiment. The Q1 results due on May 26 — unaudited consolidated figures approved by the board under Lei Jun — are expected to show revenue of around 100.8 billion RMB. Analysts will focus on the operating margin of the EV segment, as well as the impact of higher memory chip costs on smartphone profitability. The buyback may steady the narrative, but the YU7 and the 17 Max will ultimately need to deliver: strong demand at the price point, controlled costs and a clear link to the Xiaomi ecosystem.