In a bid to stabilize its falling stock prices and protect against margin call risks, Samsung has announced a substantial stock repurchase program worth 10 trillion Korean won (approximately $7.2 billion). This move, viewed as a measure to counter selling pressure, is also aimed at safeguarding the Samsung family, which has pledged shares for loans to pay inheritance taxes.
The repurchase plan will be executed in phases over the coming year, with an initial 3 trillion won to be bought back over the next three months and canceled by February 17, 2025. The remaining 7 trillion won will be addressed in subsequent board meetings. This marks Samsung's first stock buyback since 2017, and the announcement led to a more than 5% rise in its share price. Prior to this, Samsung's stock hit a four-year low, having fallen nearly 30% this year due to concerns about leadership and competitive disadvantage in the memory chip market.
Analysts have positively received the buyback, viewing it as a proactive measure by Samsung's management to prevent further declines in stock value. However, there are concerns about the adequacy of the buyback to effect a long-term recovery. The buyback constitutes only about 3% of Samsung's market capitalization, which some believe is insufficient given the company’s cash flow and the extent of past stock depreciation.
Samsung has denied that the buyback is solely to protect the family’s financial interests, although the family faces significant loan repayments and potential margin call requirements if the stock price drops below a certain threshold. Additionally, foreign investors have expressed unease over Samsung's competitiveness in advanced memory chips and foundry operations, adding to the sell-off pressure.
Economic uncertainties, including potential trade tariffs and funding cuts, have further complicated Samsung's recovery efforts. The company's future performance will heavily depend on regaining its competitive edge in core areas such as memory chips, foundry, smartphones, and displays, to attract and retain investor interest.
