In June 2026, Insta360 (688775.SH) found itself navigating through a perfect storm of challenges, with four major events unfolding simultaneously.

On June 9, the company launched its first horizontal dual-lens gimbal camera, the Luna Ultra, marking its official entry into the handheld gimbal market—a domain long dominated by DJI.

Just a day later, on June 10, DJI filed a lawsuit in the U.S. District Court for the Eastern District of Texas, alleging that the Luna Ultra infringed on six of its patents.

The following day, June 11, saw the unlocking of 227 million restricted shares, accounting for 56.5% of the total share capital and representing a market value of approximately RMB 40.9 billion. This resulted in an almost eightfold surge in tradable shares overnight.

From June 10 to 24, a national subsidy pricing dispute escalated, initially sparked by consumer complaints. According to Haixia Metropolis Daily, the Luna Ultra's launch event advertised a "standard version priced from RMB 3,999." However, consumers later discovered that this price included a 15% national subsidy (about RMB 705), with the original listed price being RMB 4,729. Following the controversy, Insta360 removed the national subsidy portal nationwide, while the RMB 4,699 Creator Kit remained available for purchase.

According to Insta360's 2025 annual report, released after its listing on the STAR Market, the company achieved RMB 9.741 billion in revenue in 2025, secured a 68% global market share in 360-degree cameras, and saw its market value peak at over RMB 70 billion.

With new product launches, litigation, share unlocks, and subsidy disputes all converging within a single month, Insta360—the global leader in 360-degree camera shipments—now confronts several critical challenges.

Industry Report Analysis

IDC's Worldwide Handheld Smart Camera Market Tracker Report for Q1 2026, released on June 25, 2026, revealed that global handheld smart camera shipments reached 4.14 million units in the first quarter of 2026, up 33% year-over-year, with sales exceeding RMB 10.5 billion, marking a 20% year-over-year increase. The faster growth in shipments compared to sales indicates a decline in average product prices.

DJI led the global market with 2.7 million units shipped, while Insta360 ranked second with 900,000 units. Although Insta360's 66% year-over-year growth was the fastest among top brands, its absolute volume remained just one-third of DJI's.

Segmented category data provides a clearer picture of the industry landscape:

• Action cameras: 2.01 million units shipped in Q1, up 39% year-over-year, with an average price of RMB 2,149, down 11% year-over-year.

• Gimbal cameras: Shipments increased by over 18% year-over-year, with an average price of RMB 2,840, down 12.5% year-over-year.

• 360-degree cameras: Over 500,000 units shipped, up 55% year-over-year, but accounting for only about 12% of the total market.

Detachable action cameras (thumb cameras) emerged as the fastest-growing segment, with year-over-year growth exceeding 350%. Reports indicate that DJI's Osmo Nano captured over half of this category's market share within four months of its launch. For non-detachable action cameras, DJI held a 54% share and continues to gain ground, while Insta360's Ace Pro 2 achieved a brand-record 17% share in this category.

The IDC report also notes that over the next three to five years, the boundaries between 360-degree cameras, action cameras, and gimbal cameras are expected to blur, with features overlapping. The space for differentiation through a single product category is narrowing.

The same IDC report shows that GoPro shipped only 300,000 units in Q1, down 33% year-over-year, with its market share dropping to 6%.

The Cost of Expansion

Relying on a single product category is no longer sufficient to sustain high growth, and Insta360 is well aware of this. Recent strategic moves indicate its ambition to transition from a "360-degree camera company" to an "imaging product company."

Gimbal cameras represent Insta360's newest and most critical step. On June 9, the launch of the Luna Ultra, the first horizontal dual-lens gimbal camera, marked Insta360's entry into a category long dominated by DJI's Pocket series.

The day after Luna's launch, DJI filed a lawsuit in the U.S. District Court for the Eastern District of Texas, alleging infringement of four utility patents and two design patents, seeking triple damages and a permanent injunction. Known for its rapid patent case adjudication, if the injunction is granted, Luna's access to the U.S. market would be immediately cut off.

The gap in patent portfolios is a reality. According to Insta360's 2025 annual report, the company holds 1,120 patents, including 261 invention patents and 859 utility and design patents (76.7% of total). DJI has not publicly disclosed its latest total patent count, but data from the National Intellectual Property Administration and patent database searches indicate that DJI's global patent applications number in the tens of thousands, several times that of Insta360.

Insta360 has countersued and filed a patent invalidation request with the National Intellectual Property Administration. However, patent litigation typically spans years, and for Insta360—eager to establish itself in this new market—the consumption of time and resources alone poses strategic pressure.

Luna's pricing also sparked controversy. As previously mentioned in Haixia Metropolis Daily, after the incident, Insta360 removed all national subsidy portals nationwide and replaced them with brand coupons. The company responded that it "did not engage in subsidy fraud or misuse," but did not directly address why it marketed the subsidized price as the retail price.

Insta360 is also expanding its product lineup. Thumb cameras Go 3S and Go Ultra doubled in shipments, showing strong growth. For non-detachable action cameras, the Ace Pro 2 improved in product strength, capturing a 17% global market share in 2025—a record for Insta360 in this category. Meanwhile, the company launched new products like the panoramic drone Yingling A1 and the AI recording omnidirectional microphone Wave.

Simultaneously advancing multiple product lines has driven up R&D and marketing costs, while market competition has forced Insta360 to lower prices across several categories. This dual pressure is directly reflected in its profit statements. In 2025, revenue reached RMB 9.741 billion, up 74.76% year-over-year, but net profit attributable to shareholders fell 6.62% to RMB 929 million. In Q1 2026, revenue hit RMB 2.481 billion, up 83.11% year-over-year, but net profit attributable to shareholders dropped 52.02% to RMB 84.62 million, with core profit (excluding non-recurring items) down 61.27% to RMB 62.25 million. Revenue growth and profit trends continue to diverge. During the same period, net cash from operating activities was -RMB 1.471 billion, indicating net cash outflow beyond profits.

The average price of action cameras fell 11% year-over-year to RMB 2,149, while gimbal cameras dropped 12.5% to RMB 2,840. On the other end of these price declines, gross margins continued to erode: 52.2% in 2024, falling to 45.74% in 2025, with Q4 2025 at just 37.53%. Rising costs for core components, coupled with falling selling prices, squeezed profits from both directions. DJI, shipping 2.7 million units in a single quarter, has far greater supply chain bargaining power than Insta360's 900,000 units, putting Insta360 at a procurement cost disadvantage.

Competition is intensifying further. According to IDC reports citing analysts, some smartphone manufacturers are evaluating the gimbal camera market, with related projects originally planned for launch in Q3 2026 or around 618 (a major Chinese shopping festival) now potentially delayed to Q4 or later.

Additionally, according to Jiemian News, which cited an internal letter from Insta360 founder Liu Jingkang in December 2025, over 30 core suppliers for the Yingling A1 panoramic drone faced exclusive pressure from DJI in the six months leading up to its launch. Beyond patent and price wars, supply chain competition is escalating.

Hardware Shortcomings, High Marketing Costs, and Secondary Market Pressures

From its revenue structure, Insta360 generated RMB 6.676 billion in overseas revenue in 2025, accounting for about 69% of total revenue, making it heavily reliant on foreign markets. Its core strengths lie in panoramic shooting algorithms and AI-powered smart editing, with rapid software iteration and low user entry barriers, which helped it build a user base early on. However, at the hardware level, shortcomings remain in image sensors, gimbal mechanical structures, stabilization hardware, and self-developed main control chips.

In the past two years, the company has significantly increased hardware R&D investment, spending RMB 1.53 billion in 2025 and doubling that in Q1 2026, with a focus on self-developed chips, gimbal hardware, and drone projects. Hardware R&D involves long cycles, high costs, and high failure risks, making it difficult to translate into mature competitive advantages in the short term. After DJI rapidly closes the gap in software algorithm features, Insta360's room for differentiation is shrinking.

According to Insta360's annual report and public information cited by 21st Century Business Herald, of the RMB 1.53 billion in R&D expenses in 2025, RMB 762 million (about 80% of net profit attributable to shareholders) was strategically invested in new categories like drones, gimbal cameras, microphones, and self-developed chips. In Q1 2026, strategic investment reached RMB 262 million, about 300% of net profit for the same period. Liu Jingkang stated in a shareholder letter that revenue from Insta360's original niche categories now accounts for over 60% of total revenue, adding, "Today's core business stems from our bold attempts seven or eight years ago."

Meanwhile, Insta360 acknowledged in its semi-annual report that its chips are currently sourced primarily from international suppliers like Sony and Ambarella, exposing it to supply disruption risks. Self-developed chip investment aims to reduce this dependency.

Business-wise, Insta360 derives the vast majority of its revenue from hardware sales. In contrast, GoPro offers a membership subscription service (cloud storage, trade-in programs), and DJI generates recurring revenue through extended warranty plans like DJI Care. Both companies have sustainable income streams beyond hardware. While Insta360 offers Insta360 Care, its scale and revenue contribution remain insignificant as a standalone income pillar. Hardware businesses inherently face the weakness of needing to restart sales with each new generation, lacking a continuous cash flow backbone in between.

Simultaneously, Insta360 is expanding across thumb gimbal cameras, action cameras, panoramic drones, microphone accessories, and other fronts, while rapidly growing its offline retail stores from 36 in 2024 to about 300 in 2025. The costs are directly reflected in sales expenses. In 2025, sales expenses reached RMB 1.679 billion, up 103.31% year-over-year, with a sales expense ratio of 17.23%. According to Wind data, this ratio ranked first among 87 STAR Market electronics companies with revenue exceeding RMB 1 billion, about 5.3 times the industry median. In Q1 2026, the sales expense ratio further rose to 18.10%, still topping peer companies. For comparison, the R&D expense ratio stood at 15.70% in the same period, with sales expenses surpassing R&D.

In the two weeks following the share unlock, the China International Capital Corporation (CICC) seat on Beijing Jianguomenwai Avenue sold a cumulative 2.8984 million shares over three days, matching the total allocation of two employee asset management plans from the IPO. Employee shareholdings were fully liquidated, and early-stage funds exited at a discount. Meanwhile, IDG holds 47.976 million shares (with an average cost of about RMB 1.35 per share, yielding over 125x unrealized gains), and Qiming holds about 33.84 million shares (with paper gains of about RMB 5.8 billion). These top-tier institutions, with hundredfold unrealized profits, have yet to issue pre-disclosure notices for share reductions. The real unlocking pressure may still lie ahead.

Among brokerages, Caitong Securities issued a "Buy" rating, Guohai Securities a "Buy," Huatai Securities a "Hold," and Goldman Sachs a "Hold." J.P. Morgan initiated coverage with a "Neutral" rating, stating that a "perfect story" now faces "poor timing."

As the market reevaluates the valuation logic behind the "world's No. 1 in 360-degree cameras," more fundamental questions arise: How much is a company with a sales expense ratio exceeding its R&D ratio, declining net profits, and limited growth potential in its core segments truly worth? Beneath its STAR Market veneer, is it more of a tech company or a marketing company? Only time will tell.

(Note: Data on institutional shareholding costs and unrealized gains in this article are static estimates based on historical financing costs from Insta360's prospectus and current share prices.)

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