Xiaomi’s Aggressive Buyback Strategy Faces Market Headwinds

Xiaomi's share price has come under significant pressure in the opening weeks of the year, declining by more than 10%. In a bold move to counter the slide, the company's leadership has initiated an aggressive share repurchase program. However, this defensive action is being tested by operational challenges within its core smartphone division and broader capital outflows, complicating efforts to establish a price floor.

While management intervenes in the market, underlying business fundamentals are presenting difficulties. Industry reports suggest Xiaomi, alongside competitors like Transsion, is being forced to scale back its smartphone shipment targets for 2026. This recalibration is primarily driven by shortages and rising prices for memory chips, which are putting direct pressure on product margins.

Concurrently, the company is pushing for growth in its electric vehicle (EV) segment. To stimulate sales, Xiaomi has launched an aggressive 7-year financing plan featuring low interest rates and minimal down payments. Market observers view this strategy with a degree of caution; while it is likely to boost volume, it also increases credit risk and could lead to reduced profitability per vehicle sold.

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

A Three-Day Buying Spree

The scale of the buyback effort has been substantial. In a clear signal that management views the current valuation as undervalued, the company has dramatically ramped up investments in its own stock. This week alone has seen consistent activity:
* On Monday, January 20, Xiaomi repurchased 4.0 million Class B shares.
* The following day, Tuesday, January 21, it bought back 5.5 million shares.
* The most recent move, on Wednesday, January 22, involved purchasing 7 million shares for approximately HKD 247.7 million.

In total, over these three consecutive trading sessions, the company has deployed more than HKD 600 million to support its share price.

Key Data at a Glance

• Current Share Price: HKD 35.14, reflecting a year-to-date loss of 10.53%.
• Capital Outflow: The fourth quarter of 2025 saw foreign capital outflows totaling HKD 50.41 billion.
• European EV Success: Despite financial market skepticism, Xiaomi was the top-selling directly imported Chinese EV brand in Europe for 2025.

The current narrative for Xiaomi is defined by a contrast between its operational expansion in markets like Europe and the growing wariness of institutional investors. In the short term, the stock remains in a distinct downtrend, with the massive share repurchases serving as the primary counterbalance to persistent selling pressure. A sustained reversal will likely depend on the company's ability to mitigate the margin compression caused by ongoing chip supply constraints.