[Featured Stock] Samsung Electronics Continues Weak Trend Despite Record Q3 Revenue

[Asia Economy Reporter Eunmo Koo] Despite Samsung Electronics posting record-high sales in the third quarter, the stock is showing weakness. Concerns over delayed economic recovery are deepening as the COVID-19 situation remains uncertain in major countries, and the market appears to have already priced in the positive third-quarter results, among other complex factors.

As of 3:19 PM on the 29th, Samsung Electronics was trading at 58,300 KRW, down 1.19% (700 KRW) from the previous trading day. As of 2:30 PM, foreign and institutional investors were estimated to have net sold 144.9 billion KRW and 34.5 billion KRW, respectively.

On the same day, Samsung Electronics announced through a disclosure that its consolidated sales for the third quarter of this year reached 66.9642 trillion KRW, an 8% increase compared to the same period last year and a 26.43% increase from the previous quarter. Operating profit for the same period was 12.3533 trillion KRW, up 58.83% year-on-year.

Notably, this sales figure surpassed the previous quarterly record of 65.98 trillion KRW set in 2017, marking the highest quarterly sales ever. Operating profit was the highest in two years since the third quarter of 2018 (17.57 trillion KRW).

This strong performance is attributed to the pent-up demand caused by COVID-19, which significantly improved mobile (smartphone) and TV/home appliance sales, as well as strong semiconductor performance supported by the U.S. sanctions against China's Huawei.

Despite the record-breaking results, the stock price has continued to decline for three consecutive trading days, showing little reaction. This is believed to be influenced by the sharp drop in European and U.S. stock markets overnight, driven by heightened fear due to the uncontrollable spread of COVID-19.

Sangyoung Seo, a researcher at Kiwoom Securities, explained, “Some research institutions argue that despite expanded government fiscal policies, COVID-19 continues, and economic stimulus efforts have failed. This case shows that controlling COVID-19 must be a prerequisite before additional stimulus measures can be introduced. Ultimately, whether Trump or Biden wins the presidential election, the possibility of economic lockdowns in the U.S. has increased, making a contraction in investment sentiment inevitable for the time being.”

Additionally, the fact that expectations for this strong performance were already priced into the stock seems to be influencing the market. The strong third-quarter results were somewhat anticipated at the time of the preliminary earnings announcement.