The shares of Samsung Electronics are as blue chip as they come. They have long been a darling of the South Korean equity market but perhaps that's changing. Investors haven't been bullish on the company's stock in 2021. They have actually underperformed the broader equity market this year.
The selloff has been intense since January when Samsung Electronics' shares had hit a peak. They're already down an additional 3% since the start of October. It's unclear what's triggering this because the analyst guidance for the stock hasn't changed.
Investors are getting rid of their Samsung shares
The company's shares have already lost a fifth of their value. They're down 21% since the January 11 peak. Foreign investors have sold over $15 billion worth of its shares. They've fallen further just in the first week of October. It's quite likely that this will be the fourth straight month of losses for the stock. This would be the longest run of losses since 2018.
It's likely that investors are worrying about peaking DRAM chip prices and slow phone shipments. The impact of inflation might also be causing them to trim their positions. Despite that, stock market analysts in South Korea remain bullish on the stock.
Almost 93% of the 45 analysts that cover Samsung's stock have a buy or equivalent rating. Not one analyst has a sell rating on the stock. They're actually predicting that Samsung's stock will surge 40% in the next 12 months. That just makes it all the more unusual why people are dumping the stock.
Samsung's operating profit for this year is already expected to beat market consensus. For Q3 2021, the company is expected to post its best quarterly profit in three years. That's still not proving to be enough to stop the dumping. Perhaps they feel that the company can't keep up this impressive run in the long term.
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