Xiaomi's stock has retreated sharply over the past week, erasing a significant portion of its summer gains. Trading at H$26.40 in Hong Kong, the shares are now 18% below their June high, and technical indicators suggest further weakness could be on the horizon as the company prepares to report quarterly earnings.
EV momentum fails to lift shares
The pullback comes despite robust electric vehicle delivery numbers. Xiaomi delivered over 30,000 vehicles in July, marking the fourth consecutive month above that threshold. First-half deliveries reached 185,000 units, a 17.18% year-over-year increase. The company's new SkyNomad SUV, priced between $38,000 and $44,000, has already attracted more than 100,000 reservations.
However, the positive EV news has not been enough to offset broader concerns. Xiaomi's stock decline mirrors a wider slump in Chinese EV makers, with peers like Nio, XPeng, and Li Auto also experiencing significant drawdowns despite strong operational metrics.
Memory costs and smartphone share losses weigh
The company's core smartphone business is facing headwinds from surging memory and chip prices. According to Omdia, Xiaomi's global smartphone market share slipped to 11% in the second quarter from 15% a year earlier, while Samsung and Apple both gained ground. Samsung's share rose to 22% from 20%, and Apple's jumped to 20% from 16%.
These pressures were already visible in the most recent earnings report. Revenue fell to RMB 99.1 billion from RMB 111.2 billion year-over-year, and profit before tax dropped sharply to RMB 5.7 billion from RMB 13.1 billion. Both major segments contributed to the decline: smartphone and AIoT revenue fell to RMB 79.2 billion from RMB 92.7 billion, while smart EV and other initiatives brought in RMB 19.8 billion, down from the prior year.
Looking ahead, the cost environment remains challenging. Qualcomm recently announced chip price increases, and memory makers including SK Hynix, Samsung Electronics, and Micron have all raised prices. These factors are likely to continue pressuring Xiaomi's margins in the near term.
Technical outlook: shooting star and death cross
On the weekly chart, Xiaomi has formed a shooting star candlestick pattern—a small body with a long upper shadow—which typically signals bearish reversal. Additionally, the 50-week and 100-week exponential moving averages have crossed, forming a mini death cross. These indicators suggest the stock could test the key support level of H$21.40, its June low. A break below that would open the door to further declines.
Investors will be watching the upcoming earnings release closely for any signs of margin stabilization or EV delivery guidance. The broader tech sell-off, as seen in recent market turbulence, adds another layer of uncertainty. For context, other tech names have also struggled despite strong earnings, as highlighted in Kioxia's post-earnings slide.
While Xiaomi's EV business is growing rapidly, the company faces a challenging operating environment. Rising input costs and intensifying competition in both smartphones and EVs could keep the stock under pressure until there is clearer evidence of margin recovery.
This article is for informational purposes only and does not constitute financial advice.
