Samsung Electronics has announced plans to repurchase shares worth 10 trillion won ($7.17 billion) over the next year following a sharp decline in its stock price. This move, the company’s first share buyback since 2017, aims to enhance shareholder value after shares plunged to their lowest point in over four years earlier this week.
The initial phase of the buyback will focus on three trillion won worth of shares, including 50.14 million common shares and 6.91 million preferred shares, to be repurchased and canceled within three months. Samsung’s board will determine how and when to allocate the remaining seven trillion won in the program, according to a statement released on Friday after market hours.
Analysts believe the buyback will provide short-term support to Samsung’s stock performance. However, they emphasize the need for robust business strategies to sustain investor confidence. Samsung’s stock, which has been under pressure, rose 7.2% on Friday—the biggest daily increase since March 2020—though it remains down 32% for the year.
The company’s challenges extend beyond the stock market. In recent months, Samsung has faced criticism for underwhelming quarterly profits and lagging behind rivals like Nvidia in supplying artificial intelligence chips. Additionally, fears over U.S. trade policies under President-elect Donald Trump have weighed on the global electronics market, further impacting Samsung.
Park Ju-gun, head of the corporate analysis firm Leaders Index, commented that the buyback reflects Samsung’s urgency in addressing the steep decline in stock prices. He noted that the move could also provide relief for major shareholders like Chairman Jay Y. Lee’s family, who have pledged shares as collateral for inheritance tax payments and risked margin calls due to the price drop.
Despite these challenges, the announcement of the buyback helped Samsung regain some investor confidence, with shares rebounding from their lowest level since mid-2020.
Featured image courtesy of The Japan Times
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