Daqo New Energy Stock Advances Amid Polysilicon Price Recovery and Strategic Capital Allocation

Daqo New Energy Stock Sees Substantial Advance Following Polysilicon Price Recovery

Daqo New Energy (NYSE:DQ) has recorded a substantial increase in its stock value, with shares advancing +44.1% compared to the wider market's +11.7%. This rally represents a triple-digit increase from its Q2 2025 bottom in April, driven by a confluence of factors including improving polysilicon prices, government intervention in the solar sector, and strategic operational adjustments by the company. The announcement of a $100 million share repurchase program further bolstered investor confidence, setting positive expectations for FQ3 2025 performance.

Catalysts for Market Rebound: Polysilicon Prices and Government Intervention

The resurgence in Daqo New Energy's stock is primarily linked to a recovery in global polysilicon spot prices. As of September 24, 2025, prices had climbed to $6.85 per kg, notably surpassing Daqo's average cash cost of $5.12 per kg in FQ2 2025. This price increase is a direct result of significant government intervention and ongoing industry consolidation in China. In mid-2025, the Chinese government, through directives from the Central Financial and Economic Affairs Commission and the Ministry of Industry and Information Technology (MIIT), mandated an end to "disorderly" price competition and urged the closure of outdated production capacity. These measures aimed to stabilize a market that had seen polysilicon prices plummet to 34,000 yuan per ton in 2024, often below production costs.

Daqo's management demonstrated strategic foresight by scaling down sales in FQ2 2025 and reducing capacity utilization to 34% of its nameplate capacity. Despite a reported net loss of $76.5 million on revenues of $75.2 million in FQ2 2025, this decision positioned the company for sequentially improved performance metrics anticipated for FQ3 2025. The company's average selling price (ASP) for polysilicon in Q2 2025 was $4.19/kg, below its cash cost, highlighting the challenging market conditions it navigated. However, the upward trend in polysilicon prices, also supported by a surge in futures prices following regulatory clarity, signals a potential industry recovery.

Furthermore, Daqo authorized a $100 million share repurchase program on August 26, 2025, extending through 2026. This move signals management's confidence in the company's valuation and the efficacy of recent regulatory actions in stabilizing the sector. The company maintains a strong financial position, reporting $2.06 billion in total cash and investments with no financial debt, providing significant liquidity and strategic resilience.

Broader Market Context and Future Outlook

The solar industry as a whole is poised for substantial growth, with the EIA projecting solar technology to account for 80% of the increase in global renewable capacity between 2024 and 2030. Daqo New Energy is strategically positioned to capitalize on this long-term trend, leveraging its healthy balance sheet and cost-effective operations. Its Q2 2025 cash cost of $5.12/kg is among the lowest in the sector, providing a competitive advantage.

Despite the recent rally, the stock has approached 2-year resistance levels of $29. While the outlook for FQ3 2025 remains robust, investors may anticipate some short-term consolidation or volatility as the stock navigates these technical levels. The broader market sentiment for solar peers has also seen a lift, albeit to varying degrees, underscoring the positive sector-wide impact of stabilization efforts.

"As of June 30, 2025, the company had a cash balance of CNY599 million, short-term investments of CNY490 million, bank notes receivable of $49 million, and total fixed-term bank deposit balance of $994 million. In total, our financial bank deposits and investment assets readily convertible into cash as needed stood at $2.06 billion, providing us with ample financial liquidity. With no financial debt, our solid financial position brings us confidence and strategic resilience to navigate conditions and weak selling prices." - Anita Xu, Deputy CEO of Daqo New Energy.

This statement from Ms. Xu underscores the company's robust financial foundation, enabling it to withstand market troughs and strategically deploy capital.

Forward-Looking Considerations

Key factors for investors to monitor include continued polysilicon price stability, further regulatory developments within the Chinese solar sector, and the pace and impact of Daqo's share repurchase program. The company's ability to maintain its cost leadership and effectively manage capacity in a rebalancing market will be crucial. With the solar industry's strong long-term prospects, Daqo's strategic positioning and financial discipline suggest a potentially positive trajectory, though market observers will keenly watch for the stock's ability to overcome technical resistance levels and for the broader implications of industry consolidation.