Xiaomi Shock: Wall Street Shorts Surge 53% as Stock Plunges 30%. Is the SU7 Dream Over, or is a Q3 Profit Twist Coming on D-Day?

Just a few months ago, Xiaomi was the undisputed star of the 2025 auto world. Its SU7 EV wasn’t just a car; it was a cultural phenomenon. But the honeymoon is over.

Since its historic peak in June, Xiaomi’s stock has plummeted nearly 30%. And now, Wall Street smells blood.

According to a stunning new report from Goldman Sachs cited by Bloomberg, hedge funds are aggressively betting against the company ahead of its November 18th Q3 earnings report. In the last week alone, short positions on Xiaomi surged by a staggering 53%. For the last two weeks, institutional funds have been net sellers.

The bear case is clear and compelling. But in a bizarre twist, at the very same moment, market analysts are predicting the impossible: that Xiaomi’s car division will achieve its first-ever quarterly profit.

One side is betting on collapse, the other on a breakthrough. This isn’t just an earnings call; it’s D-Day for Xiaomi’s entire automotive gamble.

1. The Bear Case: Why Wall Street is Shorting Xiaomi

Hedge funds aren’t betting against Xiaomi for no reason. They see a perfect storm of negative catalysts aligning.

• Smartphone Margins are Evaporating: The core problem is in Xiaomi’s original business. Goldman Sachs analysts, who cut their price target by over 10%, point to soaring memory chip prices. This squeezes the profitability of the smartphone division, which is still the company’s primary cash cow.
• Car Factory Hell & Slowing Demand: The automotive dream is hitting a wall of reality.
  • Factory Delays: The Beijing factory’s Phase 2 expansion is reportedly delayed, bottlenecking monthly production at around 15,000 units.
  • Demand Jitters: Initial SU7 order hype is fading. Channel surveys suggest new orders dropped by 30% month-over-month in August and September.
  • Brutal Competition: The 200k+ RMB EV market is a warzone, with rivals like Nio and Zeekr slashing prices.
• No New Catalysts: In the short term, investors see nothing to get excited about—no new blockbuster phone, no autonomous driving breakthrough, and no explosive delivery numbers beyond current expectations.

2. The Bull Case: The SU7 Profit Machine No One Saw Coming

Despite this profound pessimism, an equally powerful bull case is emerging, centered entirely on the car business.

• Massive Delivery Ramp-Up: The scale-up is undeniable. After delivering 68,000 cars in Q2, Xiaomi is expected to have delivered a massive 109,000 units in Q3 —a 60% sequential jump.
• Incredible Profit Margins: This is the real bombshell. While most EV startups (including Nio, XPeng, and Rivian) bleed cash for years, Xiaomi is expected to post a Gross Profit Margin (GPM) of over 15% on its cars. This is thanks to a high Average Selling Price (ASP) of over 210,000 RMB.
• Lei Jun’s Promise: CEO Lei Jun personally promised the car business would be profitable in the second half of 2025. Failing to deliver would be a massive blow to his credibility.

This is precisely how [Xiaomi is rewriting the rules of the car market]. By leveraging its existing tech ecosystem and [supply chain mastery], it is achieving profitability at a speed traditional automakers can only dream of.

3. Analysis: The Showdown on November 18th

This sets the stage for an epic battle. The market is no longer valuing Xiaomi as a phone company; it’s valuing it as a high-growth EV company.

The Bears believe: The Q3 car profit is a one-off fueled by initial, non-recurring hype. They believe this profit will be erased in Q4 and 2026 by rising battery costs (lithium carbonate was up 20% in Q3), fading demand, and the reality of its struggling smartphone business.

The Bulls believe: The Q3 profit is the new baseline. It proves the business model is sound and that Xiaomi can do what Tesla did: build a high-margin tech business on wheels.

On November 18th, the narrative will be decided. We’ll be watching for three key numbers:

1. Automotive Gross Margin: Is it truly above 12-15%?
2. Smartphone Gross Margin: How badly did the memory chips hurt the core business?
3. New SU7 Order Flow: Are new orders still strong (e.g., >12k/month), or is the demand cliff real?

If Xiaomi delivers, the 53% surge in short positions could fuel a massive “short squeeze.” If they miss, the 30% stock plunge could look like just the beginning.