Phone

Samsung shares fall to lowest level in two months as investors price in Galaxy Note 7 recall

Things were looking great for Samsung last month. The Galaxy S7 was performing well and the Galaxy Note 7 had received a lot of praise soon after it was unveiled. Samsung shares were surging to new record highs as investors were bullish about the company’s continued sales momentum in the second half of this year. It all came crashing down when Samsung confirmed a battery cell issue with the Galaxy Note 7 which has forced it to recall and replace all 2.5 million units shipped since the Galaxy Note 7 was released on August 19.

Investors absorbed the news and held their nerve so there wasn’t an immediate reaction but after the Federal Aviation Administration sent out a warning against the Galaxy Note 7 they started dumping shares which caused Samsung to lose some $10 billion in market value. That loss in market value has now doubled as investors price in what they believe to be the true impact of the Galaxy Note 7 debacle. Investors were seen dumping their positions after Samsung told Galaxy Note 7 owners to power down their phones and urged them to take part in the replacement program.

Samsung shareholders have seen the biggest two-day price drop since the 2008 financial crisis, over $20 billion have now been erased from Samsung’s market cap and even though the recall is expected to cost Samsung around $1 billion the impact on its brand value is believed to be even higher. Analysts are now of the view that even though Samsung will be selling the Galaxy Note 7 with new batteries the handset will just won’t sell as well as it would have had this entire debacle never happened. Some expect that Samsung might lose as much as $5 billion in revenue due to the Galaxy Note 7 recall.

Samsung hasn’t released its earnings guidance for the third quarter as yet but are likely to see a glimpse of the true financial impact of the Galaxy Note 7 recall in its expected revenue and profit.

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India1
India1

No wonder 🙁 Samsung is the most unreliable big company in the world. All they want os just profit, nothing else. Few things to support my argument: 1. Remember Samsung Hubs? 2. And ChatOn? 3. Milk Music 4. Milk Video How can you ever trust a company with such a poor tract record. Now I don’t even look at any new service launched by Samsung..because I know it will be shut down sooner or later. Okay agreed they were just services and I can pardon Samsung for it for some extent. But what about these 5. Laptops gone (Except in… Read more »

KillFrenzy
KillFrenzy

I really miss ChatOn and all their ecosystem. And even now Knox message is still not out.

Like you said, it’s easier to change brands now.
Hopefully they will learn sometime

SenorSjon
SenorSjon

Somehow, I just want to say: “I told you so”. Had it been the Note 4 or before, they could have just send everyone on a battery exchange program and be done with it. That wouldn’t have cost them that much value.

But I think they rather axe the Note line now, the name is tainted. So welcome S8 Stylus… with fixed battery of course.

mantaka
mantaka

Go buy LG V20 and stop crying… personally I never swap batterys and after 2 years or maybe 1 year I will buy a new phone.

SenorSjon
SenorSjon

The V20 will be in Europe when the next line of flagships is due to arrive. LG has onscreen buttons and that is a big no-go. I’ve read too many bootloop problems with G4 & V10 and it hasn’t got an OLED screen.

eHoolie
eHoolie

You mean to tell me if you could swap out a bad/dangerous battery for a good one, you wouldn’t do it?