After experiencing six consecutive months of stock price increases in 2025, Daqo New Energy (DQ.US) has seen a significant pullback over the last three months. From its peak of $36.59 last November, the stock price fell to a closing price of $25.59 on January 15, representing a decline of 30% over that period. This volatility reflects the evolving sentiment of secondary market investors regarding the previously discussed "polysilicon industry reserve" initiative and its subsequent developments. In May 2025, market rumors suggested the industry would establish a joint entity for purchasing and stockpiling polysilicon, aiming to phase out approximately 1 million tons of outdated capacity, with further news indicating the platform was expected to be established within 2025. This spurred a rebound in the stock prices of several listed solar companies, including Daqo New Energy. The subsequent manufacturing enterprise symposium on July 3 further elevated attention on the industry's "anti-involution" efforts, strengthening market expectations for a domestic crackdown on disorderly competition and fueling a sustained rally in Daqo's stock price that began in May and lasted for six months, culminating in a cumulative gain of 153.97%.

It is evident that Daqo New Energy's recent stock performance is closely tied to the progress of the industry's "anti-involution" campaign, with the so-called "industry reserve joint entity" rumors serving as a key pillar for the rally that started last May. However, in early January, regulators directly halted the "reserve self-regulation" operations within the domestic solar industry and announced the cancellation of value-added tax export rebates for photovoltaic products, effective April 1. In short, the photovoltaic industry, now considered mature, can no longer rely on "crutches" and must allow market forces to eliminate outdated capacity. From this perspective, investors can readily understand the reasons behind the company's recent sharp stock price decline. The release of Daqo New Energy's 2025 annual performance forecast on January 16 raises the question: could this be the catalyst for its stock price to stop falling and rebound?

The "anti-involution" narrative has become a major factor driving stock price fluctuations. Examining Daqo's recent trading patterns reveals a distinct "M-shaped" roller coaster trajectory following the release of its unaudited Q3 2025 financial results on October 27, indicating a clear shift in overall market sentiment, where various industry rumors have significantly influenced short-term trading decisions. Prior to the Q3 earnings report, buoyed by the positive "reserve rumors" from May, Daqo's stock had been fluctuating technically along the middle to upper Bollinger Band, only touching the lower band after a significant 14.52% drop on October 10, with a surge in volume to 2.836 million shares suggesting new investors were entering the market. On the day the Q3 report was released, although the stock price surged 14%, the daily volume was only about 2 million shares, significantly lower than previous levels, and volume decreased further the next day, indicating that existing shareholders adopted a clear wait-and-see attitude, with Q3 industry performance becoming a key signal for investors.

Following October 27, Daqo's stock price continued to climb. This was because, by the end of October, most major players in the crystalline silicon industry chain had disclosed their Q3 2025 reports, showing that a majority of leading companies had positive net operating cash flow for the quarter, a substantial improvement over the previous two quarters. This indicated that, despite ongoing challenges like losses, tightening financing, and high debt levels in Q3 2025, leading companies still maintained relatively healthy cash flow. Daqo's Q3 performance was particularly strong, with net operating cash flow reaching 55.52 million yuan, marking the first time its quarterly operating cash flow turned positive since Q4 2023, reflecting the initial effectiveness of "anti-involution" efforts in the silicon material segment.

However, a downward channel began to form as market sentiment continued to weaken. The fundamental reality of the industrial silicon market—a struggle between "weak fundamentals and strong costs"—had not substantially changed. This made it difficult for market sentiment to sustain its upward trajectory, leading to a technical correction in Daqo's stock price just two trading days after it touched the upper Bollinger Band on November 10. Over the next eight trading days, it fluctuated back to the lower band, and after showing oversold signals, it rallied again from November 24 to December 10. This rebound, however, differed from the rally between October 27 and November 10. Firstly, the second rally was driven more by technical factors amid stabilized sentiment, unlike the first which was fueled by Q3 earnings. Secondly, the peak on December 10 did not reach the upper Bollinger Band, indicating weaker sentiment. Finally, daily trading volume during the second rally was significantly lower than during the first, showing weaker external buying interest and greater investor caution.

December 9 emerged as a critical juncture. Market news indicated the registration of Beijing Guanghe Qiancheng Technology Co., Ltd. with a registered capital of 3 billion yuan. As its shareholder list included silicon material giants like Tongwei and Daqo New Energy, it was perceived by the market as the long-rumored polysilicon capacity consolidation and acquisition platform. With the six-month-long rumor finally materializing, some shareholders began selling on the news, only to find limited buying interest. From December 12 to 31, there were only two trading days with volume exceeding 1 million shares, both of which ended with losses exceeding 5%, clearly indicating weak external demand and leading to continuous price pressure from sellers, which kept market sentiment depressed. After December 29, Daqo's stock price largely tracked the lower Bollinger Band, showing no signs of a rebound on the charts. Concurrently, rumors emerged alleging that silicon industry self-regulation might constitute "monopolistic" behavior, further exacerbating the release of negative sentiment.

On January 8, Daqo's stock price plunged 11.41%. This drop was attributed to market rumors that the State Administration for Market Regulation had summoned the China Photovoltaic Industry Association and leading companies, including Daqo New Energy, to discuss potential monopoly risks, issue clear rectification opinions, and demand corrective actions. Also on January 8, the domestic announcement to cancel photovoltaic export rebates effective April 1 aimed to force the industry towards high-quality development. Starting January 8, Daqo's Bollinger Bands widened significantly downward, and the stock traded below the lower band for two consecutive days, showing clear oversold signals. Notably, however, for five consecutive trading days after January 9, the stock price did not continue its sharp decline with the expanding bands but instead moved upward away from the lower band, showing signs of bottoming out and recovering.

Before the US market opened on January 16, Daqo New Energy disclosed its 2025 performance forecast via its A-share listing. It announced that while its net loss for the period narrowed compared to the 2.7 billion yuan net loss recorded in fiscal 2024, the loss was still expected to be in the range of 1.0 to 1.3 billion yuan. This news was unlikely to prompt a rapid halt to the stock's decline. During trading on January 16, Daqo's stock price fell quickly after opening, with the morning session seeing a maximum drop of over 3%. However, in the US afternoon session, the stock's movement stabilized amidst fluctuations, and by the close, it had pared the day's loss to 1.6%.