As Samsung Electronics’ stock faces continued downward pressure, investors are shifting their focus to when a potential rebound may occur, raising questions about the company’s future performance in the semiconductor market.
Just three months ago, hopes were high that the stock would recover to the “100,000 won ($74.37)” level, but now concerns have shifted to whether it will drop below the “50,000 won($37.18)” threshold.
Most South Korean securities firms believe that the recent price decline has already factored in the negative outlook, implying that the stock has likely fallen as much as it will, and further drops are now less likely due to concerns over performance and a slowdown in the semiconductor industry. Although further short-term drops cannot be entirely excluded, some analysts suggest that mid- to long-term strategies, anticipating a rebound, may prove advantageous.
However, one key condition must be met for this recovery to occur: foreign investors need to stop selling off shares.
Recently, foreign investors in the Korean market have been shifting funds from Korean stocks into Chinese markets, as China’s large-scale stimulus measures appear to be taking effect. Many now view Samsung as less competitive than SK Hynix and other rivals. Unless Samsung delivers an outstanding performance that surpasses its competitors, it seems that external conditions will need to improve for any rebound to happen.
As of Oct. 7, data from the Korea Exchange (KRX) showed that Samsung Electronics closed at $45.07 on Oct. 4, down 1.14%. Over the past month (Sept. 5 to Oct. 4), the stock has declined by 13%, falling from $52.06. On Oct. 2, the stock briefly dropped to an intraday low of $44.55 before slightly recovering. It now faces a critical point—whether it can maintain its current level or fall further.
Just in July, there was a strong belief that Samsung’s stock would rebound.
Back on July 11, Samsung shares surged to $66.02 during trading, buoyed by optimism around AI semiconductors driven by U.S. company Nvidia. There was even hope that the stock might soon return to the “100,000 won” mark.
However, during the third quarter (July to September), the stock plunged 25%. This marks the third-largest quarterly decline since 2000, following a 45% drop in Q3 2000 and a 27% drop in Q3 2001, amid the collapse of the dot-com bubble. As a result, many individual investors have suffered significant losses.
The main driver behind this slump has been the sell-off by foreign investors.
From Sept. 3 to Oct. 4, foreigners sold off Samsung shares for 19 consecutive trading days—the longest stretch since the 25-day selling spree from Mar. 25 to Apr. 28, 2022, immediately following Russia’s invasion of Ukraine.
During the third quarter, foreign investors offloaded $5.9 billion worth of Samsung stock, accounting for 90% of the total foreign net sell-off of $6.6 billion in the domestic market over the same period. Institutional investors also sold $188.8 million worth of shares, while individual investors purchased $5.8 billion, absorbing much of the selling pressure.
Meanwhile, Samsung Electronics is set to release its preliminary third-quarter results on Oct. 8. However, analysts are forecasting the company’s revenue to be around $60.4 billion, with operating profit expected to reach $8.2 billion. This marks a 19% drop in the operating profit consensus compared to a month ago ($10.1 billion).
Analysts have lowered Samsung’s performance forecast due to a combination of factors, including concerns over the peak-out of the memory semiconductor market, a weakening competitive edge in high-bandwidth memory (HBM), and the growing competitive gap with Taiwan’s TSMC in the foundry (semiconductor contract manufacturing) sector. As business struggles have continued, Samsung recently halted operations at some foundry facilities, adjusting production rates in response to the ongoing slump.
