Xiaomi short bets hit record as memory costs, EV rivalry weigh on shares

Bearish bets on Chinese firm Xiaomi Corp. reached a record before its first-quarter earnings report, as investors grew concerned about rising memory costs and competition in China’s electric vehicle market.Short interest climbed to around 9% of free float last week from less than 2% a year earlier, according to S3 Partners.

Xiaomi shares have lost half their value since an all-time high in July, ranking among the worst performers on the Hang Seng Tech Index over that period.
“The main issue for Xiaomi has been rising memory prices, and the impact on profitability,” said Kevin Net, a portfolio manager at Financiere de L Echiquier.A “lackluster consumer environment in China and persisting intense competition in the EV space” also weigh on the stock, he added.

Xiaomi is expected to report an 11% year-on-year revenue decline for the first quarter ended March — its first such drop since mid-2023 — when it releases results later Tuesday, Bloomberg-compiled data show.

Analysts said gross profit margin may rise to 21.4% from the previous quarter, partly due to higher product pricing.

(With input from agencies)