Xiaomi Corporation announced a new share repurchase plan of up to HK$2.5 billion, as its stock continues a prolonged decline from last year’s highs amid recurring auto-related controversies, slowing growth in core smartphone and IoT businesses, and mounting pressure on margins.
After the market closed on January 22, Xiaomi (01810.HK) announced that it had entered into an automatic share repurchase agreement with an independent broker. Under the agreed parameters, the broker will repurchase up to HK$2.5 billion worth of Xiaomi’s Class B ordinary shares.
The repurchase will begin on January 23 and will terminate upon the earliest occurrence of one of the following conditions: the day before the company’s 2026 annual general meeting of shareholders, namely June 4; the cumulative consideration paid for share repurchases reaching HK$2.5 billion; or early termination of the plan in accordance with the agreement terms. On that day, Xiaomi’s share price closed at HK$35.24 per share, down 0.51%, with its market capitalization falling to HK$918 billion.
On January 20, Xiaomi proactively disclosed two vehicle fire incidents that had occurred the previous day in an effort to ease market concerns over vehicle quality. One fire broke out at an auto repair shop in Haikou, Hainan province, while the other occurred in Kaifeng, Henan province, where a Xiaomi Yu7 caught fire following a collision in an unexpected traffic accident. No casualties were reported in either case, and Xiaomi said that, up until the point when vehicle data transmission was interrupted, the power batteries were operating normally.
Xiaomi chairman Lei Jun publicly promised during a livestream on January 3 that Xiaomi would not avoid public opinion controversies and would respond directly to market doubts.
Xiaomi’s share price has been in a sustained decline since reaching a cycle high at its late-September product launch last year, falling from nearly HK$60 per share to below HK$40—a drop of more than 38%—and erasing over HK$560 billion in market capitalization.
During this period, Xiaomi’s share price suffered three notable sell-offs. On September 25, the company unveiled a new smartphone widely viewed as the most iPhone-like in its product history, skipping the number 16 and naming the lineup “Xiaomi 17 Standard/Pro/Pro Max.” The following day, the stock plunged more than 8% as investors cashed in on launch-related expectations and short-term funds took profits. On October 13, Xiaomi’s automotive business was swept into a public opinion storm following an accident, intensifying market concerns and sending the share price down 5.71%. On November 19, the day after the release of third-quarter earnings, the stock fell another 4.81%.
Xiaomi has been steadily executing share repurchase plans to shore up its share price. Since launching multiple rounds of buybacks on November 20, 2025, the company has repurchased shares on the Hong Kong Stock Exchange for 34 consecutive trading days as of January 22, 2026, cumulatively buying back 206 million Class B shares at a total cost of more than HK$7 billion, with repurchase prices ranging from HK$36.46 to HK$42.26.
In June 2025, Xiaomi announced a plan to repurchase up to 10% of its outstanding shares, or no more than 2.6 billion shares. To date, the shares repurchased account for only about 0.8% of the total planned amount. Although the stock briefly rallied after the buyback plan was unveiled, it slipped back into a downward trend after mid-December.
On the fundamentals, Xiaomi reported its Q3 2025 results on November 18, 2025. Quarterly net profit exceeded expectations, and the automotive business turned profitable ahead of schedule. However, the company warned that gross margins for both its smartphone and automotive segments are expected to face pressure in the coming year.
The Q3 report showed that Xiaomi’s automotive, AI, and other innovative businesses turned profitable for the first time on a single-quarter basis, posting an operating profit of RMB 700 million, compared with a loss of RMB 500 million in the previous quarter. Revenue in the segment soared 199.2% year-on-year to RMB 29 billion, setting a record high. Xiaomi also announced it expected to achieve its annual sales target of 350,000 vehicles within the week, with deliveries set to expand further next year.
However, looking ahead to 2026, Xiaomi president Lu Weibing described the outlook as “very challenging.” With the phasing out of purchase tax incentives, Xiaomi has implemented countermeasures but anticipates gross margins will decline next year.
Xiaomi’s smartphone business, which accounts for 40% of the company’s revenue, experienced modest volume growth but declining prices. Third-quarter revenue fell slightly by 3.1% year-on-year to RMB 46 billion. Shipments edged up 0.5% year-on-year to 43.3 million units, while the average selling price (ASP) dropped 3.6% year-on-year to RMB 1,062.8. At a media briefing, Lu Weibing acknowledged that sharply rising memory costs were putting significant pressure on the fourth quarter and warned that next year’s pressure would be “far greater than” in 2025, squeezing gross margins and potentially driving “relatively large” increases in retail prices. He also revised Xiaomi’s 2025 smartphone shipment target down from 175 million units, set in the second quarter, to 170 million units.
In addition, revenue growth for Xiaomi’s IoT (Internet of Things) and lifestyle consumer products segment also slowed. Third-quarter revenue reached RMB 27.6 billion, with year-on-year growth falling from previous double-digit levels to 5.6%. Within this segment, revenue from smart large home appliances dropped 15.7% year-on-year, mainly due to lower shipments in mainland China amid subsidy rollbacks and intensified competition. Nonetheless, the segment’s gross margin remained strong, rising 3.2 percentage points year-on-year to 23.9%.
Notably, the first phase of Xiaomi’s smart home appliance factory was completed and began operations on October 28, becoming the company’s third large-scale manufacturing base after its automobile super factory and smartphone smart factory. Xiaomi stated that the factory’s peak annual capacity could reach 7 million units, with an expected annual output value of RMB 14 billion, and it is set to begin large-scale production of air conditioners next year. Everbright Securities expects the new factory to support Xiaomi’s high-end product expansion, overseas growth, and cost optimization in the IoT business.
In May, Lu Weibing stated that Xiaomi’s air conditioner business aims to rank among the top three in the Chinese market by 2025 and to be “one of the very top” by 2030. However, the market generally views it as highly challenging for Xiaomi to emerge as a leading player in the white goods sector, which includes air conditioners, refrigerators, and washing machines. White goods companies benefit from highly integrated supply chains, scale advantages that create barriers to entry, and strong pricing power held by industry leaders in a concentrated market. Additionally, Xiaomi’s relatively flat distribution channels and limited profit-sharing with distributors make it difficult for its home appliance business to penetrate lower-tier markets.
Following the earnings call, several sell-side firms downgraded their profit forecasts for Xiaomi. Citing continued pressure from rising memory costs on the smartphone business and intensified competition in the automotive segment, BOCOM International Securities lowered its total revenue projections for 2025–2026 to RMB 466.6 billion and RMB 534.0 billion, respectively, and cut its adjusted earnings per share (EPS) forecasts to RMB 1.66 and RMB 1.74. Huatai Securities reduced its revenue forecasts for 2025–2027 by 0.3%, 2.3%, and 1.9%, and lowered its Non-GAAP net profit estimates for the same periods by 1.6%, 7.6%, and 4.3%, to RMB 43.40 billion, RMB 48.22 billion, and RMB 62.40 billion.
Xiaomi’s target price was also revised downward. Huatai Securities cut its target price from HK$65.4 to HK$53.8 while maintaining a “Buy” rating. BOCOM International Securities lowered its target price to HK$50, reflecting a 26x overall price-to-earnings ratio for 2026, and also maintained a “Buy” rating. Citing a decline in risk-reward appeal, Nomura Orient International Securities downgraded Xiaomi to a “Neutral” rating on August 7 and continues to maintain that rating, keeping its target price unchanged at HK$61.