Samsung shares rise 5% amid ‘desperate’ buyback plan

Samsung announced a 10 trillion won ($7.2 billion) share buyback in an attempt to regain investor confidence and stabilize its market position after shares fell 30% since the start of the year. This is the first share repurchase since 2017. The market reacted positively – the company’s securities rose by more than 5% on Monday.

Image Source: Samsung Electronics

The world’s largest maker of chips, home appliances and smartphones, Samsung said after the market closed on Friday that it would buy back shares to “boost its market value” during 2025. The company will also incur 3 trillion won ($2.1 billion) in share cancellation costs over the next three months, the Financial Times reports.

Investors hope the move will help stem a sharp decline in Samsung’s share price amid growing concerns about the company’s management under Lee Jae-yong, the third generation of Samsung founders. Jay Kwon, an analyst at JPMorgan Chase, said the share buyback was a surprising but positive move for investors. “We believe that Samsung management is committed to preventing further declines in stock prices,” Kwon wrote in his research report.

However, some experts believe that the main purpose of the buyout is not to combat the crisis, but to protect the Samsung founding family from the risk of a margin call (the need to deposit additional funds into a brokerage account) associated with bank loans taken out to pay inheritance taxes. In particular, according to Park Ju-geun, head of the Leaders Index research group, the Lee family has debt of nearly 3 trillion won ($2.1 billion) and would face a margin call if the stock price remained below 53,000 won ($37.9). On Monday, after the announcement of the buyout, Samsung shares were already trading at 56,700 won ($40.5).

Samsung denies that the buyback was intended to avoid a margin call on the Lee family. However, the company’s shares are under pressure from foreign investors concerned that Samsung may lose its position in the production of memory chips and semiconductors. Additional pressure was exerted by weak financial results for the third quarter and the lack of certification from Nvidia to supply memory chips for products in the field of artificial intelligence.

The fall in stock prices also worsened following the election of Donald Trump as US president, raising concerns about potential trade tariffs and the possible withdrawal of Samsung’s CHIPS Act funding.

Analysts say Samsung’s long-term share price recovery will depend on whether the company can regain its leadership position in the technology space. “Many of Samsung’s core businesses, including memory chips, semiconductors, smartphones and displays, are in decline. They need to strengthen their technology position to attract investors again,” said Albert Yong, managing partner of Petra Capital Management.