Samsung Electronics to Cancel $2.11 Billion in Stock, Announces Share Buyback Plan

Samsung Electronics Co. Ltd. (SSNLF) has announced a significant move to enhance shareholder value by canceling $2.11 billion worth of its own shares and unveiling a new share repurchase program. The tech giant, which has been grappling with a sluggish stock price, aims to boost its share price and restore investor confidence through these strategic initiatives.

The company's board decided to buy back 4.81 million common shares and 6.64 million preferred stock from Wednesday to May 16, with an estimated combined value of $2.7 billion at Monday's closing prices. This new share repurchase program follows the company's announcement in November 2024 of a 10 trillion won ($6.92 billion) share buyback program, its first since 2017. In the recent buyback phase completed on Feb. 13, Samsung acquired approximately 50.14 million common shares at 54,526 won ($37.72) per share and 6.91 million preferred shares at 45,500 won ($31.48) each.

Samsung's largest shareholder, Samsung Life Insurance, adjusted its position during this period, reducing its common shareholdings from 508.16 million to 503.90 million shares through market transactions. The company's stock price has been volatile in recent months, but the share buyback plan has been positively received by the market. Samsung's shares rose by over 6 percent during early trading on Monday, February 17, 2025, following the company's announcement of the 10 trillion won share buyback plan on Friday, February 15, 2025.

Analysts have mixed views on the effectiveness of the share buyback plan in enhancing shareholder value. Shin Young Securities analyst Park Sang-wook believes that the move will likely have a very positive impact on the stock price, considering past cases of share buybacks. However, other analysts, such as NH Investment & Securities analyst Ryu Young-ho, emphasize that sustained improvements in financial performance are essential for the effect to last. They suggest that short-term improvements in the memory market, high-bandwidth memory (HBM) advancements, and rapid adoption of advanced processes are critical for sustained stock growth. Over the long term, a recovery in technological competitiveness and advancements in the foundry sector will be necessary.

In conclusion, Samsung Electronics' share buyback plan is a strategic move to enhance shareholder value by reducing the number of outstanding shares and stabilizing the stock price. While the market has positively received the news, the long-term effectiveness of the plan will depend on the company's ability to improve its financial performance and maintain a strong market position in the semiconductor industry.