Huawei Brake Incident Caused two consecutive limit-downs for JAC Motors Saw some people shouting to buy the dip on JAC Here’s my take: The logic behind buying the dip on JAC is different from a typical black swan event where stocks are mistakenly sold off. The ideal contrarian buy is when the stock price was originally stable, a sudden negative event causes consecutive drops, but the company’s fundamentals remain unchanged— this would be a case of emotional sell-off. For JAC in this case, its recent rise was driven by orders for the Zunjie model and the premium from expectations of brand elevation. The company itself has been consistently losing money, and turning profits is just a distant speculation. The core expectation supporting the stock price increase— the safety reputation of its million-yuan models— is now under scrutiny due to the brake incident, which could impact Zunjie’s reputation and future orders. The market will also question JAC’s quality control capabilities, and the credibility of its high-end manufacturing story will decline. The stock price hasn’t dropped back to its starting point. The decline is essentially a partial correction of optimistic premiums, not purely panic-driven sell-offs. When buying the dip, consider three points: 1. Is the issue related to batch-specific parts or a design flaw? Can the rectification stabilize orders and reputation? 2. Will Huawei and JAC maintain their partnership? Is the Zunjie new car plan unchanged? 3. Does the valuation align with the adjusted expectations? If rectification goes smoothly and the partnership remains intact, there might be an opportunity for a strategic play. But if orders are lost and the partnership is damaged, the stock price drop reflects a reassessment of value— not a buying opportunity. To put it simply: For a typical black swan event, you profit from emotional sell-offs. For this kind of bubble correction, buying the dip is betting on whether the story can be repaired. The uncertainty is higher, and the margin for error is smaller. If we see five consecutive limit-downs, and the price drops back to pre-rally levels around 18, say 16, I think it might be worth buying the dip. But right now, before the brake incident, JAC had already risen 40%, and now it’s only down 20% after the hit. I don’t think it’s worth rushing to buy just yet— better to wait and see.