The massive Galaxy Note 7 recall isn’t even a full year behind us but it looks like Samsung is wasting no time moving ahead. The Samsung stock price has been steadily rising over the last year in spite of the trouble experienced by the company. So what is driving the impressive performance of Samsung stock in the face of adversity? There are a few factors at play.
First, Samsung’s chip division is performing very well and Samsung has surpassed Intel as the largest chip manufacturer in the world. Samsung’s semiconductors accounted for about $7.21 billion in profit while Intel only profited $3.89 billion in the second quarter of 2017. Until now, Intel had been riding a 25 year streak as the world’s largest semiconductor manufacturer. Talk about taking down a giant. Although, that’s not to say that Intel still isn’t finding success of their own. Rather, this shows that Samsung is capable of taking top spot in the industry against an established giant.
Of course, some of the recent news and excitement leading up to the Galaxy Note 8 launch has also helped the Samsung stock prices. Investors love to anticipate big successes like new product launches and all the cards seem to be lining up for the Galaxy Note 8 launch to be one of the most successful smartphone launches in Samsung’s history. If the rumors are true, it sounds like Samsung could get the Galaxy Note 8 to market at least a month before the iPhone 8 is available. This would be a huge competitive advantage for Samsung. As well, it also looks like the Galaxy Note 8 could cost several hundred dollars less than the iPhone 8. If Samsung can provide a smartphone that’s on par with what Apple is launching for less money then consumers may be more willing to choose a Galaxy Note 8 this fall. All of this news is adding up as get closer and closer to fall smartphone launch season and the anticipation is reflected in Samsung’s stock price.
Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More
The biggest increase in Samsung stock this year could be yet to come. The company has reported great results throughout the year and that’s before the Galaxy Note 8 has even been officially announced, let alone sold. Assuming the Galaxy Note 8 launch goes better than last year’s Galaxy Note 7 launch then Samsung stock could still have better days ahead of it. When Samsung announced their smartphone profits for the final quarter, they will be announcing profits based on a (presumably) smooth launch with no recalls necessary. Of course, that’s a bit of an assumption on my part but you have to think Samsung will be pulling out all the stops to ensure that no Galaxy Note 8 batteries catch on fire. Literally, the only way to go is up when it comes to Samsung’s Galaxy Note lineup.
If the Galaxy S8 and S8+ are any indication, consumers still trust the Samsung brand. The models don’t appear to have suffered any blow back from the Galaxy Note 7 fiasco and have posted sales numbers that outpace the Galaxy S7. More impressively, about 50% of S8 buyers have opted for the larger (and more expensive) Galaxy S8+. So, not only do consumers love Samsung smartphones but they love the larger sized Samsung smartphones. That should be good news for the Galaxy Note 8 launch.
It will be interesting to watch Samsung stock over the next month. Rumors have suggested that the Galaxy Note 8 will be officially unveiled at the end of August with an early-September launch date. As these dates are confirmed or, at least, leaked more; we could see the stock rise further as investors anticipate this year’s big launch. And, of course, Samsung is more than just smartphones and chips. TV sales, laptop sales, tablet sales, and new product launches that use Samsung components this fall will all help contribute to the company’s bottom line.
This fall will be huge for Samsung. The Galaxy Note 8 launch should finally mark the end of the Galaxy Note 7 debacle. More good news regard chip sales and Galaxy S8 sales should also help to push Samsung stock higher. By time 2018 rolls around, we could be talking about an incredibly successful year for Samsung who, just last fall, was reeling after a botched product launch. Only time can tell us what is in store for Samsung but it appears that the company is making all the right moves.