Although Samsung Electronics released its biggest-ever results for the second quarter of this year, analysts said the sharp drop in its share price on the 7th was a typical case of "profit-taking."
Bloomberg reported that since 2019, Samsung Electronics has posted 16 earnings surprises at quarterly results announcements, but on 10 of those occasions the stock fell on the day of the announcement.
That pattern repeated on the day. After Samsung Electronics released that its second-quarter net profit jumped 19 times from a year earlier, the share price at one point during trading fell as much as 9.7% from the previous trading day.
Bloomberg analyzed that investors tend to take strong results as a chance to take profits rather than a catalyst for further gains. With much of the optimism about the artificial intelligence (AI) industry already priced in, even better-than-expected results are not enough to drive additional increases, it said.
Gary Tan, a portfolio manager at U.S. asset manager Allspring Global Investments, said, "By the time results are announced, most of the good news is often already reflected in the price," and added, "Results only serve to confirm investors' expectations, and are more likely to lead to profit-taking than further gains."
In fact, as expectations were priced in ahead of the announcement, Samsung Electronics' share price rose more than 10% over the past two days. Bloomberg said this shows investors were already anticipating growth in the semiconductor cycle and expecting strong results.
Hebe Chen, chief analyst at the trading platform Vantage Global Prime, said, "Samsung Electronics' strong results are a textbook case of the adage in memory stocks: 'Buy the rumor, sell the fact,'" and added, "The results confirmed that the AI memory cycle remains very solid, but given that the share prices of Samsung Electronics, SK hynix and Micron have already risen sharply, the market has likely priced in much of this good news."