Should Investors Buy BYD's Stock in October?

BYD (OTC: BYDDY) has a strange problem. The Chinese carmaker's business may be getting more interesting even as its financial numbers are getting harder to love. In the first half of 2026, revenue fell 7.1% year over year to RMB 344.8 billion, while net profit attributable to shareholders fell 20.5% to RMB 12.3 billion.

Yet underneath those disappointing numbers, something important is happening. BYD is rapidly becoming a global business. So, should investors buy BYD stock in October? Let's explore further.

Image source: Getty Images.

The recent financials aren't great

Let's start with the obvious.

BYD's earnings momentum has weakened of late. Revenue declined in the first half, while profit fell much faster. The company is also operating in one of the world's most competitive auto markets, where aggressive pricing has made it increasingly difficult to translate vehicle volume into earnings growth.

To be fair, BYD's challenges extend to the whole auto industry. For instance, in the first half of 2026, China's total sales declined 4.1% to 15 million units. Unsurprisingly, carmakers have little choice but to compete for the smaller market.

The silver lining is that, despite the weak domestic sales, BYD's overseas business is growing nicely. In the first half of 2026, exports grew by 68% to 792,000 units, with revenue reaching 181.3 billion yuan, which was about 53% of BYD's revenue. So in a way, BYD is offsetting the challenges in China with growth elsewhere.

In other words, BYD is facing short-term challenges mainly in its domestic business, partially offset by growth in its overseas business.

BYD is building for the long term

While BYD has short-term issues to address, the longer-term prospects remain exciting. In particular, BYD is taking the capabilities it developed in China -- batteries, manufacturing scale, supply chain control, and vehicle technology -- and exporting them worldwide. But it isn't merely exporting cars; it is building a global manufacturing footprint.

In Europe, BYD's first passenger-vehicle factory in Hungary is moving toward production. The company has also said it will eventually need three vehicle assembly plants and one battery factory in Europe as it expands and adapts to local regulations.

The same strategy is playing out elsewhere. Brazil has become BYD's largest market outside China, while Europe and Southeast Asia are becoming increasingly important growth markets. The company is also pursuing local production to get closer to customers and reduce the friction created by tariffs and trade barriers.

This is what makes BYD particularly interesting. Investors aren't simply looking at the company as it is today. They are looking at what it could become if it successfully replicates its Chinese manufacturing advantages across multiple continents.

Of course, that comes with a major caveat. Factories and local distribution networks cost money. Building a brand takes time. Therefore, BYD needs to prove that global expansion produces attractive returns on capital -- not merely higher revenue.

What does it mean for investors?

BYD is at a crossroads. The recent financials are weak, China remains difficult, and overseas expansion requires substantial investment and carries execution risk. On the other hand, BYD is in the middle of a transition from a dominant Chinese EV manufacturer into a global automaker. The outcome of that transition will matter far more than whether the next quarter beats or misses expectations.

For investors considering BYD's stock in October, the most important question may therefore be surprisingly simple: How much conviction do you have in BYD's ability to execute over the long run? If you believe BYD can replicate its manufacturing advantages overseas and turn its growing global footprint into attractive returns on capital, buying the stock today makes sense.

But if you believe China's competitive pressures will persist, overseas expansion will consume too much capital, or BYD will struggle to translate scale into sustainable profits, then avoiding the stock is the best course of action.

Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.