The market just knocked Daqo New Energy down almost 10% in a single session, yet the real story is not the top line. Revenue in Q2 came in at about US$62.7m, but the headline for investors is the depth of the profit squeeze. Daqo reported a gross margin of negative 132% and a net loss of about US$81m, which is a heavy hit for a company long sold as a low cost solar materials producer.

Coming into this print the stock had gained over the past month but was still down over the past quarter. Today’s selloff shows how sharply the market is repricing that profit pressure.

Is Daqo New Energy now a genuine deep value opportunity after this profit squeeze, or just a low multiple for good reason? Compare the market’s reaction with the full valuation analysis for Daqo New Energy

Q2 2026 Earnings Summary

• Revenue, Q2 2026 vs. Q2 2025: US$62.7m vs. US$75.2m (decline of about 17%)
• Net Loss, Q2 2026 vs. Q2 2025: US$81.2m loss vs. US$76.5m loss (loss widened by about 6%)
• Basic EPS, Q2 2026 vs. Q2 2025: US$5.99 loss per share vs. US$1.14 loss per share (loss per share increased by more than 4x)
• Gross Margin, Q2 2026 vs. Q1 2026: 132% gross loss vs. 520% gross loss (gross margin remains deeply negative, with a smaller loss margin than in Q1)

Prefer clear charts over scrolling through dense earnings tables and profit figures? See Daqo New Energy’s full financial picture, including how analysts are modeling the company from here, in the visual company report for Daqo New Energy.

Daqo bull case leans on technology and policy

Bulls argue Daqo New Energy can ride out this downturn using N type cost leadership, regulatory support and a strong balance sheet until pricing and margins recover. The latest quarter partly supports the resilience angle. Utilization of about 57% produced 43,675 tons and shipments picked up to 15,190 tons as sales resumed. Gross margin improved from a very large loss in Q1 to a 132% gross loss and EBITDA loss narrowed to US$29m. However, with average selling price at US$4.04/kg and total production cost at US$5.95/kg, the key milestone of selling above cash and full costs is not hit. The zero debt position and about US$1.9b in liquid assets give Daqo time, yet operating cash flow used US$276m in the first half shows that time is being spent quickly while the AIDC power project remains pre revenue.

Bear case focuses on losses and cash burn

The bear narrative is that chronic overcapacity, below cost pricing and recurring losses will keep Daqo New Energy under pressure and gradually eat into its cash cushion. Q2 numbers speak directly to that concern. Revenue of US$62.7m sits against a gross loss of US$82.7m and a net loss of US$81m. Average selling price stays below both cash cost and total production cost, so margins remain structurally negative even as shipment volume increases. Industry inventories are still high and management again ties any real recovery to policy enforcement and capacity exits. The balance sheet remains a clear offset with about US$1.9b of readily convertible assets and no debt, yet operating cash outflow of US$276m in six months shows the buffer is being drawn down. The 9.3% share price drop post results suggests the market is giving more weight to these unresolved risks.

With revenue under pressure, margins deeply negative and US$276m of operating cash used in six months, the key question is how long Daqo New Energy’s cash can absorb this run rate. Check the full solvency runway and liquidity profile in the financial health analysis of Daqo New Energy stock.

Stay Ahead Of Your Next Move

If the profit squeeze and heavy cash burn at Daqo New Energy has your attention, register for free with Simply Wall St and add it to a Watchlist to track price against fair value and monitor for a potentially more attractive entry point. After you decide to take a position, keep on top of what matters most using the Portfolio Command Center so you see key updates without all the market noise. For a longer term view, tap into crowd insights and different theses on Daqo New Energy through the Community as part of your ongoing research. By spotting potential catalysts and risks early, you may improve your chances of staying ahead of the market rather than reacting to it.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.