samsung stock bombs

While you’re not looking, Samsung has lost $44 billion in market value since April, marking the company’s worst streak since December 1983.

There are a couple reasons why Samsung’s stock has been absolutely murdered, but none is bigger than this: no one wants Samsung’s products anymore.

As it turns out, as hyped up as the product was in the media, no one really wanted Samsung’s latest line of Galaxy smartphones, bringing the stock down 8.1% this month alone (as a comparison, Apple’s stock fell only 6% during the market mayhem about a week ago — and this alone prompted Tim Cook to send an unprecedented letter to CNBC’s Jim Cramer to assure investors that Apple is fundamentally safe despite the widespread panic over China).

A large part of Samsung’s mistake was misreading consumer demand for the Samsung Galaxy S6/S6 Edge. As it turns out, customers wanted the three-sided S6 Edge more than the conventional looking S6 — and as a result, produced three times more S6 than S6 Edge… most of which are probably sitting in warehouses now.

Samsung also tried to one-up Apple by releasing the sequel to the S6 Edge (S6 Edge+) and Note 4 (Note 5) ahead of Apple’s September 9th event, where the company is expected to unveil the next-generation iPhones. Sure, that’s a great strategy and all, but there’s one big problem: Samsung’s most die-hard fans hated the products. They complained about the lack of a removable back, which means that customers will not be able to swap out additional memory or battery. Many even indicated that they were willing to jump ships across to iOS.

Samsung also priced its latest line of smartphones, by any definition, irrationally. The company is trying to compete with the iPhone – yet it has priced the S6 Edge+ and Note 5 higher than what Apple charges for the iPhone 6 Plus (a 64GB version of the S6 Edge costs $914.99 without contract, while a similar model of the iPhone 6 Plus costs just $849.99).

Here’s the one thing Samsung doesn’t seem to understand (and if they haven’t by now, will they ever?): The iPhone, with it’s tie-in to the iOS ecosystem, is a speciality product. It should be priced (and it is!) like one. On the other hand, Samsung’s Galaxy line of smartphones is a commodity. Every single Galaxy smartphone runs on Android, a software that just about any other smartphone manufacturer (apart from Apple) uses.

Samsung doesn’t have much to differentiate itself from the thousands of Android smartphones out there. Once an Android smartphone is “good enough” in terms of speed and quality, nothing else really matters other than the price. Why would anyone in the right mind buy a $900+ Samsung smartphone over a really well-made OnePlus, for just one-third of the cost?

Samsung thinks it can justify its high prices by copying Apple’s design, but fail to understand that people are often buying the iPhone for both the product and the ecosystem — an ecosystem that neither Samsung nor Android offers.

In fact, Samsung is getting clobbered exactly where all these cheap, yet beautiful Android smartphones are made: China. According to data provided by IDC, in Q1 of 2015, Samsung’s marketshare in China shrank by 53%. Comparatively, Apple’s increased by 62.1%. Behind Apple are the producers of the cheap and well-made Android smartphones, Xiaomi (up 42.3%) and Huawei (up 39.7%).

Here’s Samsung’s stunning free fall, illustrated in chart form:

samsung-loses-50-of-its-china-smartphone-market-sh-1431344174.06-4363879In an interview with Bloomberg, analyst Lee Seung Woo from IBK Securities Co. perhaps sums it up best: “We all know its smartphone business isn’t doing well… I can’t really figure out when the stock will stop declining. The fundamentals look problematic.”