Shares of Lotus Technology Inc. (LOT) are soaring 11.52% in Wednesday's trading session following the release of the company's first quarter 2025 financial results. Despite a significant revenue decline, investors are responding positively to narrowed losses and improved margins.

Key highlights from Lotus Technology's Q1 2025 report include:

• Total revenue of $93 million, down 46% year-over-year
• Net loss narrowed by 29% to $183 million
• Operating loss decreased by 56% year-on-year to $103 million
• Gross margin improved to 12%, up from 3% for the full year 2024
• Delivered close to 1,300 vehicles during the quarter

The luxury electric vehicle maker attributed the improved gross margin to easing impacts from prior destocking efforts. While the revenue decline is significant, investors seem to be focusing on the company's ability to narrow losses and improve operational efficiency.

Lotus Technology also highlighted strategic developments that may be contributing to investor optimism. These include the launch of a national-level GT single-make racing series in China and Malaysia, recognized by the FIA for International C-license upgrades, and plans to unveil its first PHEV model later this year.

CEO Qingfeng Feng commented on the results, stating, "We are encouraged by the progress made this quarter, particularly the steady recovery in our margin profile and continued contribution in international markets." The company is actively evaluating strategic pathways and localization opportunities to strengthen its presence in global markets, particularly in the U.S.

As Lotus Technology continues to navigate the competitive electric vehicle market, today's stock surge suggests that investors are betting on the company's potential for further improvements in profitability and market expansion.