Market AnalysisAug 21, 20262 Min
SK Hynix Shares Jump 14% After Record $28.6 Billion Buyback: What Does It Mean For Investors
Shares of SK Hynix and Samsung Electronics rebounded sharply on Thursday after both stocks had fallen sharply the day before.
The stock has nearly tripled in value this year, but its price has been very unstable. It fell nearly 10% on Wednesday to 1.5 million won.
SK Hynix shares jumped 13.9% to KRW 1.708 million. Samsung Electronics shares rose 9% to KRW 269,750. The gains came after a major selloff on Wednesday. SK Hynix had fallen 9.8%, while Samsung dropped 5.4%. The KOSPI also plunged more than 5%.
Investors reacted positively to plans for bigger returns to shareholders.
SK Hynix announced record buyback
SK Hynix announced a major share buyback on Wednesday. The company will spend KRW 40 trillion ($28.6 billion) to buy back and cancel its own shares. The programme starts Thursday and will run until November 19. It covers around 24.07 million shares. This is about 3.3% of the company's total shares.
The company said it is the largest share cancellation by a listed South Korean firm.
SK Hynix to give more money to shareholders
SK Hynix has also increased its shareholder-return target. The company now plans to return more than 50% of its cumulative free cash flow generated from 2025 to 2027 to shareholders. Its earlier target was to return within 50% of that cash flow.
It may also announce more buybacks, share cancellations and dividends. SK Hynix had around KRW 69 trillion in net cash at the end of the second quarter. This is due to the strong demand for AI memory chips.
SK Hynix workers may get 6.3% hike
SK Hynix and its labour union have reportedly reached a tentative agreement on this year's salary and bonus package. The deal includes a 6.3% salary increase for employees. Under the new plan, 40% of the bonus will be paid in cash, while 60% will be given as SK Hynix shares.
What does it mean for investors?
JPMorgan expects SK Hynix could return at least $130 billion (180 trillion won) more to shareholders by 2027. This would be in addition to the 40 trillion won ($28.9 billion) share buyback already announced by the company.
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SK Hynix will buy and cancel around 24 million shares. This means fewer SK Hynix shares will remain in the market. When there are fewer shares, each remaining share represents a slightly bigger part of the company. This can be good for existing shareholders.
JPMorgan analyst Jae Kwon also believes the large payout to shareholders could help stop SK Hynix's share price from falling further.
