Daqo New Energy Corp. (NYSE:DQ) shares fell sharply after the polysilicon producer reported second-quarter results that came in well below analyst forecasts, as weak solar industry demand and falling selling prices continued to weigh heavily on its financial performance.
The stock dropped 14.6% following the release. Daqo posted a loss of $1.20 per ADS, considerably wider than the consensus estimate for a loss of $0.53.
Revenue reached $62.7 million, missing the $114.7 million analyst forecast by approximately 45%. Sales were also down 17% from $75.2 million in the second quarter of 2025, although they improved substantially from $26.7 million in the first quarter of 2026.
Polysilicon sales recover but prices remain under pressure
Daqo recorded a significant sequential recovery in polysilicon sales volumes after resuming sales activity in June.
Sales volume increased to 15,190 metric tonnes from just 4,482 metric tonnes in the first quarter. However, the benefit of higher volumes was offset by further deterioration in pricing, with the average selling price falling to $4.04 per kilogram from $5.96 per kilogram in the previous quarter.
Production reached 43,675 metric tonnes during the period. Total production cost stood at $5.95 per kilogram, while cash cost was $4.57 per kilogram, leaving selling prices below the company’s production cost.
CEO Xiang Xu stated, “In the second quarter of 2026, market sentiment across the solar PV industry remained cautious amid weak domestic demand and elevated inventory levels, which drove prices lower across the solar value chain. Despite these headwinds, we resumed sales in June, delivering a sequential increase in revenue and a narrowing of our quarterly operating and net losses.”
Losses narrow from first quarter despite severe margin pressure
Although Daqo remained deeply loss-making, some financial metrics improved sequentially.
Gross loss narrowed to $82.7 million from $139.4 million in the first quarter, while gross margin improved to negative 132.0% from negative 521.5%.
The improvement reflected the recovery in sales volumes, but the continued gap between polysilicon selling prices and production costs illustrates the difficult economics currently facing the business.
Weak domestic demand, elevated inventories and excess pressure across the solar supply chain continue to limit pricing power, creating an uncertain backdrop for a sustained earnings recovery.
Daqo maintains 2026 production targets
For the third quarter of 2026, Daqo expects polysilicon production of between 40,000 and 45,000 metric tonnes, giving a midpoint of 42,500 metric tonnes.
Full-year production is forecast at between 160,000 and 180,000 metric tonnes, with the midpoint standing at 170,000 metric tonnes.
While these targets point to continued substantial production, investors remain focused on whether polysilicon prices can recover sufficiently to improve margins and reduce losses.
The subdued industry outlook therefore overshadowed the sequential improvement in second-quarter sales and profitability metrics, contributing to the sharp decline in Daqo shares following the results.
Strong liquidity provides a buffer
One significant source of financial support remains Daqo’s balance sheet.
As of June 30, 2026, the company held approximately $1.9 billion in cash and readily convertible assets while carrying no debt.
That liquidity provides Daqo with a substantial cushion as it navigates the downturn in polysilicon pricing. However, the second-quarter earnings miss, deeply negative gross margin and continued pressure across the solar photovoltaic supply chain suggest that a meaningful operating recovery will depend heavily on improved industry demand and pricing conditions.