Stock to Sell: Samsung
If you haven’t noticed, Samsung (SSNLF) has been in a rut lately after its flagship Galaxy S4 failed to perform up to Wall Street forecasts. As a result, investors have fled Samsung stock, sucking out more than $25 billion in market capitalization from the Korean company as shares flopped 15% in just more than a month.
The complaints? Samsung hasn’t innovated enough to make the new incarnation any different or more valuable, harming the upgrade cycle that often results in fresh sales for hardware manufacturers.
But the bigger risk is that Samsung is looking to move away from Google and Android software to a new, open-source platform called Tizen. Experts say the new OS will be in place as soon as August. That might help prop up margins and keep Samsung as a frontrunner if it works … but beating Apple (AAPL) and Google in the software game is no small feat, and I wouldn’t bet against them.
Bigger-picture, JPMorgan and Morgan Stanley both cut sales forecasts and cut profit estimates on the company. So given the negativity and the risk right now, I’d steer clear of Samsung stock.