Xiaomi’s 45% Rout Deepens Despite Record Buyback as EV Losses and Memory Costs Mount Ahead of Earnings

Xiaomi’s stock has slumped to within a whisper of its 52-week low, closing at HK$2.48 on Thursday, as a historic share repurchase and an accelerated product roadmap fail to offset twin headwinds from its electric-vehicle division and surging memory-chip prices. The shares have shed roughly 45% since the start of the year, and the relative strength index has plunged to 20 — deep in oversold territory. Short sellers now hold 9% of the free float, betting the pain is far from over.

The centrepiece of Xiaomi’s defence is a buyback programme launched in early June that allows the company to spend up to HK$20 billion on its own stock, equivalent to 10% of outstanding shares. By mid-month, management had already scooped up more than 30 million shares. Yet the selling pressure has barely eased. “The buyback is a show of confidence, but it’s being overwhelmed by fundamental concerns,” one Hong Kong-based trader noted.

Those concerns are concentrated in the EV business, which generated nearly 20 billion yuan in first-quarter revenue but posted an operating loss of 3.1 billion yuan. Xiaomi loses roughly US$5,600 on every vehicle it delivers, according to calculations from analysts, with weak sales of the high-end SU7 Ultra model partly to blame. The company still targets 550,000 deliveries this year, but after only about 150,000 units through May, the production line would need to average 57,500 cars per month from June onward — well above the current record of 50,000. Jefferies has already trimmed its full-year forecast to 495,000 units.

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Meanwhile, Xiaomi’s core smartphone business, which accounts for the bulk of revenue, is under siege from a sharp rise in component expenses. Memory-chip prices climbed as much as 90% in the first quarter, and with 62% of Xiaomi’s handsets selling for under US$200, the company has limited ability to pass on those costs. The gross margin in the smartphone segment has contracted from 12.4% to 10.1% as a result. To protect profitability, management is leaning on software optimisation and artificial intelligence, but analysts remain sceptical. Jefferies recently downgraded the stock to “underperform,” while Goldman Sachs expects adjusted net profit for the second quarter to tumble to 5.4 billion yuan — roughly half the year-ago figure. The bank also cut its earnings-per-share estimates for the next three years by up to 6%.

Xiaomi is trying to fight back with a flurry of new products. President Lu Weibing has confirmed that HyperOS 4, built on Android 17 and stripped of all legacy MIUI code, will be rolled out in late summer. The core apps have been rewritten from scratch in Rust and Flutter. More immediately, the flagship Xiaomi 18 Pro is slated to launch in China as early as September, with a global release following soon after — a marked acceleration from the typical six-month delay European customers have endured in the past.

But even a faster product cycle may not be enough to shift the narrative. The EV division remains a drag on both cash and investor sentiment, and the memory-cost headwind shows no sign of easing. Xiaomi plans to spend roughly 40 billion yuan on research and development this year, betting that long-term innovation will eventually pay off. The next major reality check comes on August 26, when the company reports second-quarter results. Until then, the monthly EV delivery figures will serve as the most closely watched signal for a stock that has yet to find its footing.

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