Samsung shares plunged to a 22-month low on Friday
Samsung recently announced the production of its gate-all-around transistor (GAAFET) 3nm chips, beating TSMC in the race to be the first to launch chips at that process level. The company’s also got some big phone announcements to be excited about, and we might be just another month away from some next-gen foldables. While that all sounds great, apparently the company’s been having some trouble with its DRAM business, which seems to be having a major impact on shareholders. As of Friday, shares of Samsung Electronics closed at 56,200 won ($43.28) — hitting a 22-month low at one point — due to mass sell-offs by some of the company’s institutional investors.
This widespread selling of Samsung shares also impacted the KOSPI (Korea Composite Stock Price Index), which closed at 2,305.42 points on Friday, highlighting the company’s power and sway in the region. Analysts speaking to The Korea Times (via SamMobile) suggest the cause of this dramatic tumble is primarily due to investor concerns over DRAM costs. According to them, the combination of those fears along with coronavirus lockdowns in Shanghai, China, and the possibility of a looming recession, may have resulted in panic among shareholders.
Retail investors acquired 40 billion won ($3.07 million) of Samsung shares on June 30. However, institutional and foreign investors reportedly sold 30 billion won and 9.8 billion won worth of stock, leading to a sizable decline in Samsung’s share prices.
Do Hyun-woo, an analyst from NH Investment & Securities, speculated that the chip shortages may go on until at least early 2023. While Hyun-woo acknowledged that the supply issues were initially believed to improve by late 2022, factors like the Ukraine-Russia war — and the aforementioned lockdowns in Shanghai — would inevitably push recovery to at least early next year.
Shinyoung Securities analyst, Seo Seung-yeon, predicts Samsung to bounce back in Q2, estimating operating profit to go up 15% year-over-year. The company is expected to post financial results sometime later this month, so we can’t say if these predictions are accurate until then.
Like any stock, Samsung’s share prices occasionally see some increased volatility. Last October, the company’s stock fell by 21% since reaching its highest point on January 11, with low smartphone sales being a key contributor to the decline. Reports of the Galaxy S21 not selling as well as its predecessors likely played a role there. The upcoming Q2 2022 earnings call could give us a decent idea about the performance of the Galaxy S22 series.
