2019 looks set to be an important year for new tech product launches, with Samsung Robots and 5G mobile phones announced at CES 2019 in Las Vegas. With these ground-breaking announcements on the horizon, it is worth looking to the past to see how such product announcements have benefited, or even harmed, their respective companies. In this post, we’ll analyze how product announcements and launches from Microsoft, Samsung, and Nintendo have caused their share price to change since the turn of the 21st century.
Who Benefits from Share Price Movements?
Ultimately, share prices fluctuate due to varying levels of supply and demand. This means that if lots of people want to buy shares, they will rise in price, whereas if lots of people want to sell shares, they will fall in price. Generally, a successful product launch of a well-received product will cause prices to rise, whereas unsuccessful launches or poor products will cause falls.
As stock prices rise or fall, investors who are either buying traditional stocks or contract for difference (CFD) trading benefit from price variations. However, there are slight differences in these forms of trading. When buying traditional stocks, investors own the stocks or shares they’re purchasing. However, CFD trading is a form of speculation and a derivative market, with CFD trading meaning that investors don’t own the underlying asset or pay taxes on any profits.
With both forms of trading, investors are looking to capitalize on the market movements caused by product announcements (and other variables).
But, how does the hype surrounding new tech announcements affect their performance in the stock market? Let’s look at Nintendo, Samsung and Microsoft’s launches to see which caused the most excitement among investors.
Case Study 1: Nintendo
Since the turn of the 21st century, Nintendo has launched three major consoles: the GameCube, the Wii, and the Nintendo Switch.
Of these three console announcements, the Nintendo Switch drove the largest increase in the company’s share price, with a 32.48% rise over a seven-day period surrounding the launch.
However, new product launches have not been universally popular for Nintendo, as the launch of the GameCube led to Nintendo’s share price dropping by 10.13% over the same seven-day period, largely thanks to mixed reviews.
Case Study 2: Samsung
Focusing on the telecommunications market, we see a similar mixed outcome for Samsung and its Galaxy models. The Galaxy S5 drove the largest increase in the company’s share price, with a rise of 3.95% over the seven-day period surrounding the announcement.
However, as the graph below shows, following the Galaxy S5, three of Samsung’s smartphone announcements (the S7, S8, and S9 in particular) all caused minor negative share price movements, with the S7 performing worst. On the other hand, as the graph shows, the Samsung products performed admirably against their Apple counterparts, with the S8 outselling all three of Apple’s products.
But, following this, the launch of the Samsung Note II in August 2012 caused Samsung’s share price to fall by 4.47% over the seven-day period around the launch, making it the company’s least successful product launch of the 21st century.
Case Study 3: Microsoft
Much like with Nintendo and Samsung, an analysis of the company’s product launches since the turn of the 21st century paints a mixed picture. This is particularly true in relation to the company’s Xbox games console, which is responsible for both the company’s most successful and least successful product launches.
In 2001, the original Xbox launch caused the company’s share price to fall by 6.04% over the seven-day period surrounding the launch, while in 2005, the Xbox 360 drove the biggest increase in the company’s share price: a rise of 1.39%.
It is clear from these three case studies that investors buying traditional stocks and CFD traders can benefit from the volatility surrounding new product announcements from tech companies, with Nintendo, Samsung and Microsoft all witnessing large stock price rises and falls in the seven days following their product announcements.