Samsung Electronics stock price, up 4% on news of semiconductor production cut! Will it become 90,000 won now?
Samsung Electronics stock price, up 4% on news of semiconductor production cut! Will it become 90,000 won now?
Samsung Electronics’ first quarter performance and stock price reaction Hello. Today, I will talk about Samsung Electronics’ first quarter performance and stock price reaction. Samsung Electronics announced on the 7th that its operating profit for the first quarter was 600 billion won, down 95.75% from the same period last year. This is mainly due to the decline in demand for consumer goods such as smartphones and TVs and the fall in semiconductor prices due to the impact of COVID-19.
However, Samsung Electronics’ stock price closed at 65,000 won, up 4.33% on the day. Foreigners and institutions bought 881.1 billion won and 114.7 billion won worth of shares respectively. On the other hand, individual investors sold 984.5 billion won worth of shares. Why did Samsung Electronics’ stock price soar despite the poor performance? The reason is because Samsung Electronics announced that it would participate in cutting semiconductor production.
The impact of semiconductor production cuts on stock price increases Semiconductors are Samsung Electronics’ core business segment, accounting for more than half of its sales. However, the semiconductor market has been falling in prices due to oversupply and weak demand. This has also worsened Samsung Electronics’ profitability.
However, Samsung Electronics announced its decision to cut production on the day, raising expectations for a recovery in business conditions. Samsung Electronics said it would reduce the operating rate of memory semiconductors by up to 20% from the second quarter of this year. This is a measure to balance the market as the global No. 1 memory semiconductor company.
The news boosted semiconductor stocks across the board. SK Hynix closed at 89,100 won, up 6.32%. U.S. semiconductor company Micron Technology rose 4.85% in after-hours trading. Industry experts predicted that semiconductor prices would stabilize and inventories would decrease due to Samsung Electronics’ production cut decision.
Samsung Electronics’ stock price outlook and investment strategy Samsung Electronics’ performance is expected to rebound from the second half of this year. Not only will semiconductor business conditions improve, but consumer goods demand such as smartphones and TVs will also improve due to COVID-19 vaccination and economic recovery. In addition, investment and innovation in next-generation technologies such as AI, IoT, autonomous driving will continue.
The securities industry predicted that Samsung Electronics’ stock price would move proactively. This is because the stock market moves about six months ahead of the real economy. Historically, Samsung Electronics’ stock price has risen when supply adjustments were made at times of worst performance.
Foreign securities firms have already raised their target prices for Samsung Electronics. Bank of America (BoA), an investment bank, raised its target price from 80,000 won to 90,000 won immediately after announcing its performance. Domestic securities firms also maintained their target prices around 80,000 won and suggested ‘increasing weight’.
Therefore, I recommend that you continue to hold or buy more shares from a long-term perspective if you currently own Samsung Electronics shares. If you haven’t bought it yet, consider buying it at a low price at the current price. Samsung Electronics is a symbol of the Korean economy and a global company. Their success is our success.