This was bound to happen to them. I don't know when these companies will ever learn to stop themselves.
Samsung Electronics Co. shares fell sharply Friday, notching their biggest single-day percentage drop in more than nine months on concerns the company’s new flagship phone may not be selling as strongly as expected. Samsung ended down 6.2% at 1,427,000 won ($1,275), against a 1.8% drop in the local benchmark stock index. The fall slashed Samsung’s market capitalization by $12.4 billion to $187.8 billion.
Traders said the decline was triggered by a research note from J.P. Morgan analyst J.J. Park, who wrote that shipments of the Galaxy S4 for the third quarter would likely “disappoint” investors, resulting in lower-than-expected margins for Samsung.
“Our supply chain checks show monthly orders have been cut 20%-30% to 7 to 8 million units (from 10 million) starting July,” wrote Park. He downgraded Samsung’s share price target to KRW1,900,000 from KRW2,100,000 previously. Samsung declined to comment Friday. The share price decline was reminiscent of the fall in Apple Inc. (NASDAQ:AAPL) shares earlier this year, which was sparked by concerns over iPhone sales.
The J.P. Morgan report caught many investors by surprise, leading to a bout of foreign selling in Samsung shares. Some analysts had estimated sales to reach 30 million for the third quarter. The company said in late May that it had shipped more than 10 million units of the Galaxy S4 since the phone hit markets in late April, outpacing sales of previous Galaxy models.
Source: Market Watch