Xiaomi Shares Dip as Aggressive Spending Plans Unnerve Investors

Xiaomi US98421U1088

Xiaomi's stock faced selling pressure on Monday, closing down approximately 2.6% in Hong Kong trading. The decline followed a New Year's address by CEO Lei Jun, in which he outlined ambitious expansion targets and a substantial five-year investment plan, causing investor concern over near-term profitability.

While expressing confidence in the electric vehicle (EV) division's outlook, Lei Jun's announcement of a massive research and development budget—totaling at least 200 billion yuan (around €25 billion) over the next five years—weighed on sentiment. The market reaction highlighted apprehensions that these significant capital outlays could pressure margins, even as they are intended to solidify the company's lead in areas like autonomous driving and its integrated "Human x Car x Home" ecosystem.

A Delicate Balancing Act

The share price movement underscores the challenging balance Xiaomi must strike. On one hand, the automaker has rapidly established itself as a serious contender in China's competitive EV market with its SU7 sedan and YU7 SUV. The auto segment reported its first quarterly profit in Q3 2025. On the other hand, the newly announced investment scale presents a clear test for sustained profitability. Monday's drop was more pronounced than the broader technology sector's performance.

Should investors sell immediately? Or is it worth buying Xiaomi?

Lingering Overhang from Insider Sale Plans

Adding to the cautious mood are plans disclosed by Vice President Lin Bin in late December. He intends to sell up to $2 billion worth of his holdings over the coming four years. This declared intention continues to act as an overhang on the stock, despite the sales being scheduled to occur gradually in the future.

Near-Term Catalysts in Focus

Attention now turns to imminent company milestones. The immediate focus is the launch of the new Redmi Note 15 smartphone, a critical volume driver for the core business. For the EV unit, all eyes will be on the Q1 2026 delivery figures. These numbers will be crucial for validating the credibility of this year's aggressive target to deliver 550,000 vehicles—a goal representing a 34% increase over the projected 2025 volume.