Shares shifted sharply higher Tuesday as Daqo New Energy posted a third quarter that looked far better than Wall Street feared — even as the Chinese polysilicon giant continued to lose money on every kilogram it sold. The beat raises a pointed question: is Daqo's improvement genuine operating momentum, or just a less-bad quarter in a structurally oversupplied market?
Sales Tripled Sequentially, but the Company Still Sells Below Cost
Revenue surged to $194.2 million as polysilicon shipments more than tripled to 46,910 metric tons from 15,190 in Q2 , driven by a shift in June to a more market-oriented sales and pricing strategy . Average selling price rose 2% to $4.12 per kilogram, while production cost hit a record low of $5.37/kg . That math is brutal: Daqo is spending $1.25 more to make each kilogram than it earns selling it. Until polysilicon prices recover above production costs, volume growth only widens losses in absolute dollar terms.
Losses Narrowed Dramatically — Mostly Because Last Quarter Was a Disaster
Net loss was $52.9 million, narrower than the $81.2 million loss in Q2 . EBITDA margin improved to -4.7% from -46.8% the prior quarter . Those comparisons flatter the result; gross margin of -31% remained far below the positive 4% recorded a year ago .
A $2 Billion Cash Hoard Buys Time — and a Bet on AI Data Centers
Cash, investments and deposits totaled $2.06 billion at quarter's end, with zero debt . That is a massive cushion for a company with a roughly $740 million market cap. Management is deploying some of that war chest into a new business: a two-phase, RMB 6 billion (~$886 million) facility making energy-storage and power equipment for AI data centers . Executives said this unit should begin generating sales in 2027 and become cash-flow positive by year-end 2027, with about CNY 1 billion in planned capital spending next year .
Q4 Production Cuts Signal the Glut Isn't Over
Industry-wide polysilicon inventories sit at roughly 700,000 metric tons, and Daqo expects Q4 output to fall to 35,000–45,000 tons, considering further utilization cuts to support destocking . Analysts remain skeptical: the consensus rating is "Reduce," with an average price target of $15.83 . The beat buys goodwill, but profitability depends on an industry shakeout that hasn't arrived yet.