$XIAOMI-W(01810)$ The drop in Xiaomi's stock price despite strong Q3 2025 earnings can be attributed to several factors:

1. Market Sentiment and Sector-Wide Weakness

The broader electric vehicle (EV) and technology sectors in Hong Kong have been under pressure, with EV stocks like XPeng, NIO, and Li Auto also experiencing declines. This suggests that Xiaomi's stock may have been dragged down by sector-wide bearish sentiment rather than company-specific issues.

2. Short-Term Profit-Taking

Xiaomi's stock had previously rallied significantly, reaching a 52-week high of HKD 61.45. After such a run-up, investors might have taken profits, especially given the mixed outlook for the smartphone and EV segments.

3. Concerns Over Smartphone Margins

Analysts have flagged potential headwinds for Xiaomi's smartphone business, including higher memory chip costs and lower-margin regions, which could pressure profitability in the near term. Despite beating Q3 earnings expectations, these concerns may have overshadowed the positive results.

4. High Short Volume

The stock has seen elevated short-selling activity, with short volume ratios exceeding 1,000% on multiple days in recent weeks. This indicates significant bearish bets against the stock, which could exacerbate downward price movements.

5. Macroeconomic and Market Conditions

The Hang Seng Index has been volatile, and Xiaomi's stock has mirrored this trend, closing below its recent highs amid broader market declines.

6. Investor Focus on Future Guidance

While Q3 earnings were strong, investors may be more focused on the company's guidance for Q4 and updates on its EV business, which remains a key growth driver. Any uncertainty here could weigh on the stock.