Companies make mistakes, and if the mistake is big enough, it can hurt the company financially. We have seen this over and over again recently with some of the more notable examples coming from Volkswagen, Wells Fargo, and Bank of America. How a company responds after a major mistake will define its future, though. It can also create a huge opportunity for traders to move in on an otherwise strong asset and position themselves well thanks to a disparity between price and worth.
One more recent example of this is currently unfolding with the Samsung dilemma. The Galaxy Note 7, the company’s newest and most hyped smartphone, was supposed to be one of the most high tech phones ever, and it launched with a huge amount of hype.
However, shortly after it was released, these phones showed signs of having major flaws. The phones were overheating and exploding, causing injuries and major concerns about safety. But thanks to chip design, collaboration with other companies, like Qualcomm, and strong products in other lines, like their high quality television sets, Samsung has been able to remain successful despite their highly publicized failures.
It’s also worth noting that thanks to the failure of the Galaxy Note 7, older models like the Galaxy S7 saw a huge surge in sales, even though they are “outdated” models. This also helped to boost the company in an unexpected way.
In a press conference, Samsung recently announced that the overheating phones were caused by two different flaws. One was a simple design flaw, while the other was a manufacturing error caused by rushed production to meet demand.
Currently, the losses that Samsung has realized because of its flawed phone stand at over $5 billion. This loss is spread out over several quarters, dampening the blow a little, but this huge amount of money is not something that can be easily brushed aside or ignored. Still, Samsung has managed to turn in their best operating profit number in three years, as reflected in their financial report from last quarter. The Galaxy Note 7 may have been a disaster, but the company is so strong and so diverse that they have managed to thrive despite this dangerous and glaring failure.
If you are looking at trading Samsung, it’s clear that there’s only one direction that the company can go. Now that the bulk of the financial hit has been absorbed by the Galaxy Note 7 losses, Samsung is going to have an easier time of improving upon the profit numbers that they have shown. Their technical indicators will vary from day to day, especially if you are a day trader or a binary options trader, but the fundamental data that has emerged from Samsung points to growth for the foreseeable future. This creates opportunity not just for investors, but also for short term traders looking for a stock that is likely to be more predictable than the rest of the marketplace. At a time when tech stocks seem to be at their top, this helps separate Samsung out from the crowd.
Samsung has taken ownership of the issue at hand, and by showing their mistakes transparently, they have given their fans a good faith look at what the company wants to stand for. So far, this technique is working and Samsung is just as successful as ever thanks to their overall business approach. It also creates a lot of opportunity for you to profit as well. Finally, don’t forget that this type of opportunity may translate over into other companies that have made publicized mistakes, creating even more fundamental discrepancies that could equal profits to the observant trader.