Samsung loses $22bn in two days as Note 7 battery explosions rock company
Samsung has taken a massive $22bn hit to its market value after stock dropped by 11% in two days following further fallout from the battery explosions plaguing its flagship Galaxy Note 7 smartphone.
Bloomberg reported shares for the electronics manufacturer plummeted by 11% from 9 September to 11 September — its lowest two-day decline since 2008. It was sparked by the company issuing a global recall of the smartphone along with warnings to stop using the device for fear of defective batteries going up in flames.
On top of this, airlines and aviation authorities have also become involved with the issue of warnings to owners to refrain from using the device onboard, or placing blanket bans on them entirely.
With an increasing number of airlines either declaring outright bans on the use of Note 7 smartphones or asking passengers to not charge them onboard, the brand is suffering a crisis. Qantas, Virgin Australia, Philippines’ Cebu Pacific, and Etihad Airways haveplaced a ban on using or storing in checked luggage for fears over in-flight incidents, while aviation authorities around the world are also considering a blanket ban.
This comes after Samsung has already halted sales of the Note 7 and is in the middle of recalling and replacing millions of its malfunctioning phones worldwide. The effect of this has seen investor confidence plummet as further uncertainty looms over the brand.
It was estimated 2.5m handsets had been sold up till the recall since its release at the end of August, which would have calculated up to $1.5bn, but the knock-on effect of the faulty battery saga goes well beyond that figure. Stock value has dropped significantly as the episode continues to unravel.
With a large number of devices across the globe and reports continuing to surface over Note 7 phones injuring owners or destroying property, it may only be a matter of time before lawsuits start to arise, which could cost the company even more.
Samsung had the opportunity to get a jump on Apple by releasing its Note 7 just weeks before the new iPhone 7 and 7 Plus launch. While the Note 7 was well-received and gained critical acclaim, it quickly turned into a nightmare as reports of explosions while the phone was being charged, became more common.
Samsung has since changed battery suppliers, from its own Samsung SDI manufacturing arm, and has begun a replacement programme for Note 7 owners.