Samsung Electronics Shares Plunge Despite Earnings Surprise: 'Buy the Rumor, Sell the News'

Samsung Electronics saw its stock price plummet despite reporting better-than-expected second-quarter earnings, a phenomenon analysts attribute to the classic market behavior of "buying the rumor and selling the news" to lock in profits.
Bloomberg reported today (July 7) that while Samsung Electronics has posted an "earnings surprise"—beating market expectations—in 16 of its quarterly earnings reports since 2019, the stock price fell on the day of the announcement in 10 of those instances.
The stock price rose in only six of those cases.
Samsung Electronics announced second-quarter operating profit of 89.4 trillion won, exceeding the market consensus of 84.1 trillion won.
However, the stock price fell by as much as 9.7% from the previous trading day during intraday trading.
Bloomberg interpreted this as investors focusing on the fact that expectations were already fully priced into the stock, rather than the strong earnings results themselves, leading them to engage in profit-taking.
Gary Tan, a portfolio manager at U.S.-based Allspring Global Investments, explained, "By the time earnings are released, most of the good news is already reflected in the stock price. The earnings announcement merely confirms expectations, and it is highly likely to lead to profit-taking rather than additional buying afterward."
In fact, Samsung Electronics' stock price had already risen by more than 10% over the two days leading up to the earnings announcement, reflecting those expectations.
Hebe Chen, a senior analyst at financial trading platform Vantage Global Prime, also analyzed, "Samsung Electronics' strong earnings report has become a classic case of 'buying the rumor and selling the news' in the memory sector. While the growth trend in the AI memory market remains strong, the market should be seen as having already priced in the positive news, given that the stock prices of Samsung Electronics, SK Hynix, and Micron have already risen significantly."
Meanwhile, in the 12 past instances where Samsung Electronics reported earnings below market expectations, the stock price rose on seven occasions and fell on five.
※ Please note: This article was translated by AI and may contain errors.