Insta360 Outpacing Apple in Profits—But Can It Withstand DJI’s Fierce Challenge?

Insta360’s Innovation Under Pressure: Can It Withstand DJI’s Aggressive Challenge? On September 11, Insta360 addressed investors directly during its earnings call, responding to two pressing concerns: performance expectations for the second half of the year and the growing competitive threat from DJI. The company acknowledged the pressure: “With the rapid pace of technological iteration and intensifying competition, we are proactively increasing R&D investments, expanding market reach, and strengthening brand presence. At the same time, higher upstream supply chain costs are raising expenses, creating short-term challenges to profitability.” This candid response follows weeks of dramatic swings in investor sentiment. On August 14, excitement soared as Insta360’s panoramic drone brand Antigravity entered public testing. In less than 15 trading days, shares nearly doubled, pushing market capitalization beyond RMB 140 billion. Yet, the release of its first half-year report at the end of August quickly cooled that enthusiasm. The numbers told a mixed story. In the first half of 2024, Insta360 recorded RMB 3.67 billion in revenue, a robust 51.2% year-on-year increase. However, net profits stagnated. Net income attributable to shareholders was just RMB 520 million, up a mere 0.25%, while adjusted net profit grew only 0.06%. This imbalance fueled concerns over profitability. On August 29, shares dropped more than 8% intraday. Since then, despite brief rebounds, the stock has corrected by over 10%, with market value settling above RMB 120 billion. Investors now ask: can Insta360’s fundamentals justify such lofty valuations? More importantly, with DJI stepping up across every major product line, can Insta360 maintain its first-mover advantage in panoramic cameras, drones, and thumb-sized action cams? Panoramic cameras remain Insta360’s foundation, contributing 86% of first-half 2024 revenue. Protecting this core is crucial for stability. The company’s second-quarter gross margin stood at 51.22%, notably higher than Apple’s 46.82%. By this metric, Insta360 is “more profitable than Apple.” Its rapid rise has been powered by relentless R&D in stabilization, AI image processing, and software ecosystems, combined with China’s supply chain efficiencies and GoPro’s strategic missteps. Since 2018, Insta360 and DJI have rolled out flagship products that closed the gap with, and in some cases surpassed, international rivals—completing the first wave of “Made-in-China” dominance in handheld imaging devices. Now, however, competition is shifting. DJI entered the panoramic camera segment in July with its Osmo 360, directly targeting Insta360’s core market. What began as separate niches—Insta360 in panoramic imaging and DJI in action cams—has evolved into broad-spectrum competition across overlapping product categories. Once challenged by overseas rivals like GoPro and Ricoh, Insta360’s fiercest competitor is now DJI, a domestic powerhouse. Despite concerns about its slowing pace of true innovation, DJI has proven adept at tactical following: replicating rival products, leveraging supply chain power, and launching with aggressive pricing. For example, the Osmo 360, criticized for being highly similar to Insta360’s X5, still sold out immediately thanks to DJI’s brand halo. Likewise, as Insta360 began testing its panoramic drone, DJI unveiled a rival product within just two months—another example of its “surround and intercept” strategy. If DJI deploys price wars or faster iteration cycles, industry-wide margins could be squeezed, directly threatening Insta360’s profitability. With both brands sharing overlapping technologies and distribution strengths, Insta360 faces the risk of gradual erosion in its market share. Insta360’s survival strategy remains rooted in innovation. Its R&D spending has surged, reaching RMB 560 million in the first half of 2024, more than double the prior year. R&D expenses now consume nearly half of profits. Recent and upcoming products include the ONE X5 panoramic camera, Ace Pro2 action camera, and GO Ultra pocket cam, alongside prototypes for lightweight wearable cameras and portable vlog devices. While these launches strengthen the portfolio, the rising costs intensify pressure on margins—exposing the company to a “grow revenue, not profits” dilemma. Insta360 is also betting big on panoramic drones as its “second growth curve.” Market analysts estimate the global aerial drone market will expand from USD 7.1 billion in 2023 to USD 12.2 billion by 2030. If Insta360 captures just 10% of that market, it could add roughly RMB 5 billion in revenue, essentially creating “another Insta360.” But risks are high. Production scalability remains untested, and DJI’s dominance looms large. Despite being criticized for incremental updates, DJI retains over 70% market share. Its swift counter-launch to Insta360’s Antigravity drone underscores how difficult breaking into this space will be. For Insta360, pursuing this path means accepting short-term sacrifices in profitability. R&D and marketing costs are front-loaded, while revenues may take years to materialize—if at all. Since its June IPO, Insta360’s stock has surged nearly sixfold, giving it a market cap of RMB 127 billion as of September 11 and a P/E ratio exceeding 120x. In contrast, peers such as Xiaomi and Anker trade at around 28–36x. Projections suggest that even under optimistic assumptions—35% global market share in imaging devices plus successful expansion into drones—Insta360’s reasonable valuation by 2030 would range between RMB 100–150 billion. In other words, today’s valuation has already priced in the company’s growth through the next six years. This leaves Insta360 vulnerable: any earnings miss, slower innovation, or intensified DJI offensive could trigger significant corrections. Insta360 stands at a pivotal crossroads. Its products remain highly profitable, even “more lucrative than Apple” in margins, and its reputation as an innovator is well deserved. Yet, it is now in direct confrontation with DJI—a competitor known for relentless tactical following and market dominance. The company’s 120+ P/E valuation reflects sky-high expectations, already factoring in success in both its core camera business and its new drone ventures. If Insta360 fails to deliver on this growth trajectory, or if DJI’s pressure proves overwhelming, the risk of valuation correction is significant. For now, Insta360’s future hinges on one question: can it convert its innovation-led strategy into sustainable, profitable growth before DJI closes in?