Samsung Electronics shares skid as record shareholder returns disappoint

Samsung Electronics shares experienced a significant decline of 8% in early trading on Monday following the unveiling of a record $79 billion shareholder-return plan. Investors had anticipated a larger allocation of Samsung's AI-driven cash windfalls and more clarity on share buybacks. The company announced that the year's shareholder returns would range from 90 trillion won to 110 trillion won ($65 billion to $80 billion), with 30 trillion won earmarked for cash dividends in the third quarter.

While this represents a five-fold increase from the previous record-high returns in 2020, analysts argued that the projected returns fell short of expectations and that more details on the buyback plans were needed. Rival SK Hynix announced its own shareholder return strategy, including a 40 trillion won buyback and cancellation of treasury shares, as well as allocating more than 50% of its free cash flow for shareholder returns between 2025 and 2027.

The KOSPI index fell 1.5% in response to the news. Samsung's decision to not mention the possibility of raising its existing shareholder return policy or announce a plan to cancel treasury shares further disappointed investors. Morgan Stanley noted that investors will need to closely monitor Samsung's January decision on the allocation of the remaining 60 trillion won to 80 trillion won, as well as the company's next capital-return framework, which will take effect the following year.

Brief written by urgent.news from Investing.com's own syndicated text. Machine-written — may contain errors; check the original before relying on it.