Daqo New Energy Corp ADR reported a second-quarter loss that exceeded analyst estimates as revenue declined sharply, though the company’s shares rose in premarket trading on robust liquidity and a zero-debt balance sheet.
The Shanghai-based solar materials producer posted an adjusted loss of $1.20 per American Depositary Share (ADS) for the three months ended June 30, 2026, missing expectations by $0.67. Revenue totaled $62.7 million, down 45% from the $114.7 million forecast and 16.4% lower than the $75 million recorded in the same period a year earlier. The company attributed the shortfall to weaker polysilicon pricing and a 45% sequential decline in sales volume.
Net loss attributable to shareholders widened to $81 million from $76.5 million in the prior-year quarter, while gross loss narrowed to $82.7 million from $81.4 million. Gross margin improved to negative 132% from negative 108% a year ago, reflecting sequential cost reductions. Operating loss totaled $98 million, compared with $115 million in Q2 2025.
Cash and cash equivalents stood at $555.3 million as of June 30, with total readily convertible liquid assets of approximately $1.9 billion, including short-term investments and fixed-term deposits. The company maintained a zero-debt structure and reported a current ratio of 6.02.
Production metrics showed resilience despite market headwinds. Daqo produced 43,675 metric tons of polysilicon in Q2, exceeding guidance of 35,000 to 40,000 metric tons, but sold just 15,190 metric tons at an average selling price of $4.04 per kilogram. Production costs remained flat sequentially at $5.95 per kilogram, while cash costs edged down 0.4% to $4.57 per kilogram. Industry-wide polysilicon prices fell to CNY 31–34 per kilogram by quarter-end from CNY 35–37 at the close of Q1.
Management reaffirmed full-year 2026 production guidance of 160,000 to 180,000 metric tons and projected Q3 output of 40,000 to 45,000 metric tons. The company also outlined plans to invest between $30 million and $40 million in 2026 toward developing AI data center power infrastructure, with prototypes expected by year-end and initial commercial sales targeted for 2027.
Regulatory developments added near-term pressure. China’s State Administration for Market Regulation issued price compliance guidance for the solar sector in late July, following earlier mandatory energy consumption standards effective January 1, 2027. The new standard sets a limit of 6.3 kilograms of coal equivalent per kilogram of polysilicon output, stricter than the initially proposed 6.4 threshold.
Despite the earnings miss, Daqo’s shares rose 6.19% to $14.92 in premarket trading, reflecting investor confidence in its liquidity position and long-term positioning in the N-type polysilicon segment.
