Samsung is preparing to unveil the Galaxy S4 in only three days. With anticipation levels higher than they've ever been for a Samsung product, there's a lot on the line. But even if South Korea's largest electronics company hits a home run, could the Galaxy S4 actually bring the company down?
At least one analyst thinks that even if the company sells millions of units of the Galaxy S4, it could see its stock price tumble along with its perception.
"Learning from our Apple experience, the Galaxy S4 launch could be Samsung's iPhone 5 'moment' — when the Apple stock peaked," said Adnaan Ahmad, analyst at Berenberg Bank, according to Barron's. "The S4 should have a better processor (Exynos Octa chip) and improved display (potentially larger/flexible) but how much better can it really be?"
"Samsung, as we have written extensively in the past, has a significant advantage over its peers as it has a 12-18 month lead on AM-OLED display technology. This technology allows for the screen to be potentially flexible and fold-able," he added.
Apple posted a $13 billion profit last quarter, boosted by a successful holiday season for the iPhone 5, but still saw its stock plummet by $47 billion the day it announced its earnings.
"In the interim, mega bulls on the Samsung stock are going to be hoping for a) market share gains versus Apple at the high end; and b) better margin structure than our estimates on the mid-to-low-end portfolio," said Ahmand. "We can say with confidence that Samsung's H1 2013 results will be robust given the S4 release and subsequent sell-in to the market. However, we think that - as with Apple - investors will quickly start to look beyond H1 2013. Hence, any near-term strength in the stock for us is an opportunity to sell down positions."
Basically, the concern is that despite incredibly strong short-term dominance, opportunities for further growth for Apple and Samsung will be limited, barring an innovative and disruptive breakthrough. That could be one reason why Apple is interested in releasing an iWatch this year, and rumors have pointed to similar ambitions for Samsung. The race isn't simply for who will sell the most smartphones this year, but also for who will make the next big thing.
