Key Takeaways
Bearish bets against Xiaomi Corp. (1810.HK) have surged to a record high ahead of its earnings report today, as the stock trades near a 52-week low on concerns that rising costs and fierce competition will erode profitability. Short interest in the company’s Hong Kong-listed shares climbed to about 9% of free float last week, according to data from S3 Partners.
"A more aggressive pricing strategy and a wider model lineup should lift order volumes, which in turn would improve capacity utilization in the EV business," Citi analysts said in a recent note, reaffirming a "Buy" rating and HK$37 price target on the stock.
The negative sentiment follows a sharp share price decline, with the stock down 26% year-to-date and nearly 46% over the past twelve months, according to data from Boerse Global. The bearish positioning comes as analysts, surveyed by Bloomberg, expect Xiaomi to report an 11% year-over-year revenue decline for the first quarter of 2026, marking the first quarterly drop since mid-2023. However, gross margin may improve to 21.4% from the previous quarter, benefiting from higher product pricing.
The upcoming earnings release on May 26 is a critical test for the company, which is navigating a difficult transition from a smartphone maker to a diversified technology firm with major ambitions in the electric vehicle space. A positive surprise could trigger a short squeeze, while a confirmation of slowing growth could see the stock break below its 52-week low of HK$28.80. The results will be followed by the Shenzhen Auto Show on Friday, where Xiaomi will showcase its new YU7 electric vehicle family.
Investors will be closely watching three key areas in the report. First, the impact of rising memory chip costs on smartphone margins, a pressure point the company flagged in the fourth quarter of 2025. Second, any update on delivery targets and profitability for its nascent electric vehicle business will be scrutinized. The segment, which includes Smart EV and AI initiatives, grew 224% to contribute 106 billion renminbi in full-year 2025 revenue but faces a crowded market with intense competition from incumbents like Tesla (TSLA) and BYD Company (BYDDY).
Xiaomi recently unveiled its new flagship YU7 GT electric vehicle, priced at around 390,000 renminbi, and a base YU7 version at 233,500 renminbi. While the launch generated excitement, the market remains competitive. Finally, investors will look for updates on the company's commitment to spend more than 200 billion renminbi on research and development from 2026 to 2030.
The stock’s last close in Hong Kong was HK$30.00. The city’s market was closed Monday for a holiday. The broader Hang Seng Index has been under pressure, while China’s industrial profit data, due Wednesday, will provide further context for the technology sector.
This article is for informational purposes only and does not constitute investment advice.
