With a current stock price of US$2,320.35 per unit, an 80 percent increase in 24 hours, Samsung announced a 50:1 stock split this morning. Samsung Electronics experienced a 64.3 percent increase in profits, totaling US$14.15 billion for the fourth quarter of 2017 ending December.
Seeing that the current market price is so high, a stock split would make Samsung more accessible to others who could not afford the steep stock price before. In addition to the stock split, Samsung announced a dividend price of US$20 per common share.
Analysts are suggesting that Samsung’s high stock price is partly the result of a shortage of memory chips the company experienced in 2017. This impacted supply and demand thus increasing revenue by a whopping 64 percent. There is a strong demand for Samsung’s memory chips used in smartphones and data centers.
Furthermore, Samsung is now the largest supplier of semiconductor in the world since 2017, commanding an outstanding 14.6 percent share of the market above Intel at 13.8 percent. The demand for Samsung’s semiconductor also contributed to the company’s impressive earnings last year.
On the flip side, analysts are suggesting that the success in the memory market may be short lived, as China will be increasing its memory production this year, which will decrease Samsung’s market influence. Samsung is already anticipating this decrease in their first quarterly review due March 31, 2018 due to a weak seasonal demand. This will be further compounded by the decrease in smartphone sales for the lower end models and a further decline in overall mobile business due to high marketing costs. However, with plans to launch the Galaxy S9 soon, Samsung expects its earnings to increase dramatically for 2018.
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