Analyst concerns that Galaxy S4 smartphone sales are lagging sent Samsung's shares down 6% early Friday.
The decline in Samsung's stock follows analyst worries that a more affordable Galaxy S4 Mini or the rugged Galaxy S4 Active smartphone will cut into GS4 sales. Analysts quoted by Reuters and others even cited Apple's reported plan to start an iPhone trade-in program as another reason to downgrade the stock.
"The mobile phone market is indeed a very volatile one," said Gartner analyst Carolina Milanesi via email. "I was not expecting the GS4 to have the same impact as the GS3, so in that sense, Samsung faces the same issues that Apple does."
There was disagreement over the impact of the Apple trade-in program on Samsung, and some cited it as a concern. "With Apple widely expected to announce an older iPhone trade-in program and also a new cheaper iPhone, overall growth prospects for [Samsung's] smartphone business have dimmed," wrote Kim Hyun-yong, an analyst for E*trade Securities.
JP Morgan this week cut its earnings estimate for Samsung after reporting that orders for the GS4 have been cut by 20% to 30% starting in July, to 7 million to 8 million units per month, on weak sales in Europe and South Korea.
Samsung's shares finished down 6.2% in Asian markets on Friday reaching their lowest level in four months for a market capitalization of 210 trillion Korean won, or $188 billion US. That was a loss of about $12 billion.
Three U.S.-based technology analysts told Computerworld that the financial markets may have overreacted to the analyst reports prior to the Samsung stock decline. Samsung could not be reached for comment.
The sudden drop in stock value shows how volatile technology stocks have become, especially with market competitors like Samsung and Apple, they said.
Some of the analysts indicated there might be softness in GS4 sales.
"The GS4 in itself is a great device, but its improvements over the GS3 are more or less incremental, and you can now buy a GS3 [with powerful features] for just $50," said Ramon Llamas, an analyst at IDC.
Still, he noted that the GS4 is reported to have sold 10 million units in less than six weeks on initial sale. Also, Samsung remains the clear leader of Android devices on the market. "A ton of vendors would love to have sold 10 million of anything in such a short time," he said.
Llamas said the real story of the GS4 will be shown over time, not by a single day of stock trading.
"This stock decline showcases how one product like the GS4 can move the shares of a company like Samsung and overshadow everything else," added Rob Enderle, an analyst at Enderle Group.
Enderle said that overall initial reviews of the GS4 were not all great and there have been some concerns about overall reliability. "Samsung's marketing of the devices has been pretty weak, given it is their flagship product," he said.
(Consumer Reports, however, rated the GS4, with its 5-in. HD display, its top smartphone, dethroning the LG Optimus G, in a May 20 report.)
Enderle, Llamas and Jack Gold, an analyst at J. Gold Associates, all discounted the impact that Apple's trade-in program will have on Samsung. Llamas noted that a trade-in program wouldn't give Apple the ability to find new customers that could be Samsung customers since they are trading in older iPhones.
"I don't think Samsung has lost any mojo," Gold concluded. "It is still driving the adoption of the Android ecosystem and will continue to do well. Certainly the financial markets react, overly sometimes, to any news positive or negative, but that doesn't really have that much overall effect on what people buy."
Nonetheless, Milanesi said both Apple and Samsung face difficulties getting new customers and will need to rely more often on sales of replacement smartphones. Innovations are moving more to software improvements and away from hardware "so upgrades are harder to sell," she said.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is email@example.com.