Reconstructing valuation logic by benchmarking against industry leaders is a common strategy in market capitalization management. However, the outcomes vary widely across companies: some successfully boost their valuations, while others see their efforts backfire.

What types of benchmarking narratives are more likely to resonate? Insta360’s stock price surge and subsequent decline after positioning itself against DJI offer valuable insights into shifting valuation dynamics.

By thoroughly benchmarking against DJI’s core product categories and engaging in sustained public discourse, Insta360 solidified its image as a direct competitor to DJI. This narrative of challenging an industry titan also reshaped Insta360’s valuation logic: it shed its single-product manufacturer label, gained valuation uplift from perceived category diversification, and its price-to-earnings (PE) ratio once soared from 60x to over 140x.

But this momentum proved fleeting. After an initial valuation boost from benchmarking, Insta360’s stock price halved from its peak, and its PE ratio returned to 60x. Why did Insta360’s valuation rise and then fall?

This article presents the following perspectives:

1. The narrative lacked fundamental support. Insta360’s initial recognition from benchmarking against DJI stemmed from market expectations of new growth through diversification. However, subsequent price wars and a doubling of R&D investment made the market realize that mere confrontation was eroding profits (its net profit margin fell from 17% in 2024 to 1.3% in Q1 this year), leading to a valuation rise followed by a decline.

2. The market demands compelling stories that enhance profits. Whether a company can improve profits and achieve differentiated competition is central to market valuation. Insta360 is now adjusting its strategy, recently de-emphasizing price wars and promoting a business model of 'hardware acquisition, software monetization.'

/ 01 / Benchmarking Against DJI to Achieve Valuation Framework Shift

August 2025 marked Insta360’s peak post-IPO. From August 15 to August 29, its stock price surged 74%, and its market cap briefly exceeded 140 billion.

This stock price surge largely stemmed from Insta360’s valuation framework shift through benchmarking against DJI.

In its early IPO stages, Insta360’s core business was panoramic cameras, and the market positioned it as a leader in a niche vertical, with valuations benchmarked against companies like XGIMI and Roborock in the segmented intelligent hardware sector. Such companies typically have PE valuation ranges of 35-50x during growth phases, but PE often drops below 20x once growth slows.

At that time, Insta360, with over 50% revenue growth, was seen as in a high-growth phase, justifying a 60x PE and a market cap of nearly 70 billion. However, its valuation bottleneck was evident: by 2027, the panoramic camera market size would be around 7.85 billion, and Insta360 already held an 81.7% market share. Even achieving 100% market share offered limited future growth potential.

To sustain high valuations, Insta360 proactively benchmarked against DJI, using full product line alignment and sustained public discourse to guide the market toward a new valuation framework. The essence of its approach was to create an industry narrative of 'dual-hero competition,' prompting institutions to abandon niche hardware benchmarks and instead value the company using DJI’s diversified imaging track.

The first step in the narrative was full product line benchmarking, covering DJI’s core categories.

For example, since launching its panoramic drone 'Yingling A1' on August 14, 2025, to encroach on DJI’s territory, Insta360 has benchmarked its Luna series against DJI’s gimbal cameras (Osmo Pocket) and its Ace series against DJI’s action cameras (Action).

The second step was sustained public discourse, reinforcing the perception of DJI as a 'direct competitor' while showcasing its own competitiveness.

Typical tactics included price war rhetoric: Insta360 publicly claimed DJI’s price cuts were due to its own product superiority, taking responsibility for the event; and filing dozens of patent lawsuits against DJI, portraying itself as a tech innovator challenging an industry monopoly giant.

This dual-pronged approach yielded immediate results. In Insta360’s early IPO stages, securities research reports often used terms like 'niche track leader,' implying certainty premiums but limited upside. After benchmarking against DJI, institutions redefined Insta360 as 'a rare A-share investable full-track imaging challenger.'

This shift also raised market expectations for Insta360’s growth. As China Merchants Electronics’ research report noted: Insta360’s addressable market expanded from the billion-yuan panoramic camera segment to the multi-billion-yuan action camera and drone markets. This meant Insta360 had shed its single-product label and was gaining multi-category valuation.

Reflected in capital markets, after launching its first panoramic drone 'Yingling A1' to encroach on DJI’s territory, Insta360’s PE ratio soared from 60x to over 140x, and its total market cap briefly exceeded 140 billion.

But the good times didn’t last. After completing its valuation framework shift, Insta360’s performance followed a rise-and-fall trajectory.

/ 02 / Rise and Fall: The Narrative Eroded Profits

After the stock price surge driven by its valuation framework shift, Insta360’s strong performance didn’t persist. Its current market cap has halved from its peak, and its PE ratio has fallen from 140x to around 60x.

The core logic behind the stock price correction is that the benchmarking narrative against DJI failed to deliver substantial profit growth.

Insta360 initially gained investor recognition through benchmarking against DJI, with the core logic being market expectations of new growth through category diversification. However, after over a year of competition, Insta360 has been continuously bleeding.

This stems from both the price war with DJI and the need for larger-scale investments after encroaching on DJI’s territory. For example, in 2025, Insta360’s R&D expenses surged 96.95% year-on-year, exceeding the total of the previous three years in a single year. This trend of declining prices and rising investments has caused Insta360’s profits to continuously slide.

In 2025, Insta360’s net profit attributable to shareholders fell 6.62% year-on-year. Profits then accelerated their decline, plummeting 52.02% year-on-year in Q1 this year. With shrinking profit margins, Insta360’s net profit margin dropped to 1.3% in Q1 this year, compared to 17% in 2024.

This profit decline trend has raised market concerns about a shift in the imaging industry’s underlying logic: imaging, once seen as a high-margin business due to high technical barriers, now faces net profit margins below 2%, suggesting imaging products are increasingly resembling traditional 3C digital businesses—characterized by high R&D investment, low gross margins, strong channel dependence, and normalized price wars. Weakening product profitability inevitably reduces market valuation recognition.

In the long run, significant uncertainties remain about whether Insta360 can improve profits in this imaging war. Drone projects, panoramic gimbal chips, and AI algorithm iterations are all costly endeavors, but whether they can form sustainable competitive advantages remains unproven.

At least from the current competitive landscape, Insta360 has seen its core market shrink despite high investments and low profits.

Although market share figures for panoramic cameras vary widely between Jiutian Benchmark and Frost & Sullivan, under IDC’s more trusted statistics, DJI’s panoramic camera shipment share exceeded 35% in Q4 2025. DJI has captured significant market share since entering the panoramic camera segment in its first quarter, a trend hard to deny.

In today’s highly competitive environment, if Insta360 cannot prove that its high R&D investments can translate into competitive barriers and demonstrate the ability to reverse profit declines, investor confidence will directly shake.

/ 03 / What Benchmarking Narratives Are Worth Pursuing?

Numerous cases exist of companies gaining valuation uplift through benchmarking against industry leaders, but successful ones typically achieve business or product differentiation post-benchmarking, driving performance improvements to sustain high valuations.

The most classic example is AMD benchmarking against Intel.

AMD positioned itself as 'Intel’s PC/server challenger,' aligning its full CPU product line against Intel’s offerings. However, its benchmarking narrative relied not on price wars or public rhetoric but on real-world performance data and architectural technology. Ultimately, AMD differentiated itself from Intel through its Zen architecture, gaining stronger competitiveness in server and gaming scenarios and achieving sustained improvements in performance and valuation.

In contrast, Insta360’s high valuation previously relied partly on 'direct confrontation with DJI' through market competition and public rhetoric. However, investors now see through the reality: mere confrontation continuously erodes profits, and given the vast size gap, Insta360’s chances of winning are slim, leading to a valuation rise followed by a decline.

Thus, for Insta360 to regain investor recognition, its current narrative must be based on profit improvement while crafting a more compelling story. Whether it can achieve differentiated competition and develop unique product strengths is central to market valuation decisions.

Fortunately, Insta360 is adjusting its strategy. This year, it has begun de-emphasizing direct price war competition with DJI and stressed the need for benign coexistence with multiple enterprises to jointly grow the market rather than engage in a zero-sum game. Liu Jingkang explicitly mentioned abandoning price competition, as relying solely on price cuts to gain share cannot achieve long-term profitability or form solid industry barriers.

After attempting to stem losses by de-emphasizing price wars, Insta360 is also trying to sell a compelling story of AI-driven business model innovation to the market. At its July shareholder meeting, Insta360 mentioned building on hardware foundations and adding AI software services to reshape its profit structure.

In Insta360’s logic, unlike traditional hardware manufacturers that profit from one-time sales, it plans to gradually increase software revenue through value-added services like AI-powered smart video editing, advanced editing, and cloud-based asset storage, ultimately achieving a business model of 'hardware acquisition, continuous software monetization.'

The new story is compelling, but whether it gains final market recognition depends on whether Insta360’s narrative is reflected in its fundamentals.