BYD is facing significant headwinds in the wake of its latest quarterly earnings release. The Chinese electric vehicle manufacturer reported a sharp contraction in profitability, sending a negative signal through the market and highlighting the intense competitive pressures it now confronts.
Third-Quarter Performance Misses Expectations
The company’s financial results for the third quarter revealed substantial challenges. Net profit experienced a severe downturn, plummeting by 33 percent to 7.8 billion yuan (approximately $1.1 billion). This marks the second consecutive quarter of declining earnings for BYD, establishing a clear downward trajectory for its bottom line.
Revenue also contracted, with total sales declining by approximately 3 percent to 195 billion yuan. The reported figures fell notably short of analyst projections, triggering an immediate sell-off. Shares listed in Hong Kong tumbled as much as 6.4 percent during early Friday trading.
Fierce Competition Erodes Market Position
An aggressive price war within China’s domestic automotive market, coupled with heightened competition, is severely impacting BYD’s margins. The company faces mounting pressure from both established rivals and emerging market entrants.
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Key indicators demonstrate the strain:
* Quarterly vehicle deliveries declined for the first time since 2020
* BYD’s market share in China contracted to 14 percent in September, down from 18 percent
* The company lost its status as China’s top-selling automaker to a state-owned competitor in September
Financial Institutions Revise Outlook
The disappointing earnings prompted a swift response from financial analysts. Market experts at Morgan Stanley anticipate a neutral to slightly negative near-term performance for BYD stock. Separately, Bank of America adjusted its forecasts, lowering both revenue and profit projections for the company. The equity is now firmly positioned in a downward trend.
International Operations Provide a Silver Lining
Despite the substantial challenges in its domestic market, BYD’s global expansion strategy is showing promising early results. The automaker has recently posted significantly improved sales figures across European markets. However, this positive international development has thus far been insufficient to offset the broader operational weaknesses or alleviate the selling pressure on its shares.
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