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Weak Demand For Its Smartphones Hurting Samsung Stock Prices

September 1, 2015 - Written By Cory McNutt

Samsung Electronics division is hurting as the demand for its smartphones continues to dwindle and this has led to five consecutive months that their stock prices have dropped, causing a loss of about US$44 billion.  According to Bloomberg, its stock priced dropped 8.1-percent in August and that ended the longest period of consecutive drops since 1983.  Even Samsung’s latest tactic of releasing its new Galaxy Edge+ and Galaxy Note 5 early to get a jump on Apple’s new iPhone 6s due out in September did not help.  Its market capitalization slid by about US$12 billion in August alone and there is much skepticism over Samsung’s earnings for the second half of the year…after all, their big flagship smartphones have already been released for the year.

Samsung was under much criticism by continuing their usual formula with the release of their Galaxy S5 – a solid device, but it did not generate much excitement.  Samsung started to make changes with their Galaxy Alpha and then Galaxy Note 4, offering up some metal construction and better results.  The new Galaxy S6 and S6 Edge were a total make over in materials and technology, although they were unmistakably a Galaxy S series device.  The critics were kind with the design but harsh on the loss of the removable battery and lack of a microSD card slot.  They added a greatly improved fingerprint sensor, 14nm processor technology, faster DDR4 RAM and faster USF 2.0 memory but they did not appease the naysayers.  Sales were good, but not outstanding and profits were down.  In an effort to jumpstart their sales, they introduced their Galaxy Note 5 early along with a Galaxy Note Edge replacement, the Galaxy S6 Edge+.  So far, it does not seem to be enough – disappointment from loyal Note followers did not help matters.

With Apple sales invigorated by their larger displays and new China devices hitting our shores, Samsung is drowning in a sea of higher prices with nothing to differentiate themselves from many other Android smartphones, whereas Apple has no iOS competition.  Samsung’s worldwide share fell by 3-percent and the company is no longer the smartphone leader in China.  In market that is quickly becoming saturated with smartphones, China is the world’s largest market and India is not far behind.  Relegated to fourth place in China with only 9-percent of the market while Chinese companies Xiaomi garnered 15.8-percent and Huawei is close at 15.4-percent.

With Apple’s new iPhone hitting for the holiday sales season, it could be a rocky road for Samsung through the end of the year.  One analyst said, “Everybody knows that Samsung’s smartphone business is going through a slump.  We cannot predict when the drop will end.”