Samsung's valuation drops by $14.3 billion as investors dump its shares

Samsung's valuation drops by $14.3 billion as investors dump its shares
It was just about two weeks ago, on the heels of the Samsung Galaxy Note 7's launch, that the company's shares hit an all-time high. Investors drove up the stock on the reception for the phablet. It looked like 2016 was going to be Sammy's year. After all, the Samsung Galaxy S7 and Samsung Galaxy S7 edge easily crushed the competition making the pair the most popular Android phones available. And the Galaxy Note 7 was quickly becoming hard to find in certain areas of the U.S.

But that all changed in a blink of an eye as Galaxy Note 7 units started exploding. A phone that had everything going for it has become forever tarnished by a defective battery. And if things couldn't get any worse, the new Apple iPhone 7 and Apple iPhone 7 Plus will launch this coming Friday, September 16th.

This morning, Samsung shares are at their lowest point in two months and $14.3 billion of market capitalization has vanished. That means that the valuation of Samsung has declined by that amount since Friday. The shares are currently off 6.3% on the day and are trading at the equivalent of $1,321.02 USD each. That is the lowest that the stock has been at since July 12th.

Samsung investors are reading dour notes from analysts who are looking at the cost of recalling, revising, and re-launching a new version of the Galaxy Note 7. In addition, lost sales to Apple and other manufacturers will have to be factored in along with the costs of fighting or settling lawsuits. Some things, like the hit to Samsung's reputation, can't be measured so easily in dollars and cents.

What can be measured in currency is the hit to Samsung's revenue. One analyst figures that after the costs of the recall (which some have put at $1.5 billion), Samsung will lose close to $4.5 billion in revenue thanks to the Galaxy Note 7 explosions.  Nomura Securities cut its third quarter mobile operating profit for Samsung by $806 million to approximately $2.8 billion.


It is estimated that Samsung had sold 2.5 million units of the Galaxy Note 7 before it stopped shipping and selling the product.

source: Reuters

Related phones

Galaxy Note 7
  • Display 5.7" 1440 x 2560 pixels
  • Camera 12 MP / 5 MP front
  • Processor Qualcomm Snapdragon 820, Quad-core, 2150 MHz
  • Storage 64 GB + microSDXC
  • Battery 3500 mAh

FEATURED VIDEO

50 Comments

1. iushnt

Posts: 3035; Member since: Feb 06, 2013

Hope Samsung can regain next year if not this year..

7. Rafishant

Posts: 390; Member since: Oct 13, 2015

Very hard indeed. $14 billion is the size of 3 times BlackBerry Limited. The Note 7 issue caused a huge damage to Samsung reputation, which needs long time of recovery. Hope they will raise above again. They proved to be a great company that cares about people safety and reacted very fast. This image doesn't reflect tens of Samsung idiots blind fanboys in this site.

10. Creep

Posts: 193; Member since: Apr 05, 2016

Samsung fanboys on this website needed a wake up call. Some of them truly walk around as if Samsung makes the best phones. Even when the performance reports came out, you still have idiots saying "BEST PHONE OUT" year after year. The Note 7 right now is definitely not the best phone with laggy performance and an exploding problem. With this issue, Samsung Fanboys have nothing left to say, and I couldn't be happier. Additionally, it gives me hope that Samsung will work on the issues with the phone and come out with an awesome relaunch addressing these issues. But for now, the Samsung Note 7 is a complete fail and nothing but a nice looking grenade.

13. GreenMan

Posts: 2684; Member since: Nov 09, 2015

You're mostly a troll, and hence on my ignore list... But this time, I'm agree with you... Nothing is perfect... But hopefully Samsung will recover... It's a GIANT of a company with a home appliances division as well... And then there are rumours that Samsung might also jump in automotive industry in near future... Anyhow, G'Day!

16. Creep

Posts: 193; Member since: Apr 05, 2016

Glad I got a reply back from you despite being on your ignore list. G'Day to you!

43. trojan_horse

Posts: 5868; Member since: May 06, 2016

It doesn't matter what GreenMan says about you, @Creep. Though I've not always agreed on all your arguments, you've had a point too. But I still believe the Note7 is and remains the best phablet. I mean, I judge a device on it's performances. The battery issue damages the user experience of the Note7 - yes, but it doesn't change the advanced tech in it.

20. You_Dont_Say

Posts: 431; Member since: Jan 26, 2015

@GreenMan You have always been a huge troll on here. Your posts are also incredibly frustrating to read.

24. GreenMan

Posts: 2684; Member since: Nov 09, 2015

I quote: "You have always been a huge troll on here. Your posts are also incredibly frustrating to read." So... I'm a troll just because you find my posts irritating...? From Wikipedia: In Internet slang, a troll (/ˈtroʊl/, / ˈtrɒl/) is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory,[1] extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the deliberate intent of provoking readers into an emotional response[2] or of otherwise disrupting normal on-topic discussion,[3] often for their own amusement. I don't provoke anyone... You certainly won't find me verbally abusing others... I consider myself a critic... And criticism isn't necessarily a sign of hatred and/or trolling... If you read my posts, you'll find that I like everything from Nokia Series 30 (Nokia 3310 anyone) to Windows Phone to Blackberry 10 to iOS to Android...!!! But say whatever to fancy, mate... We live in a democracy where everyone is entitled to his/her own opinion... G'Day!

27. You_Dont_Say

Posts: 431; Member since: Jan 26, 2015

Dude please just shut up.

44. trojan_horse

Posts: 5868; Member since: May 06, 2016

On what grounds do you stand to tell him to shut up? Did he attack you in any way? You should confront only what is related to you, or confront if you have a reasonable rebuttal to someone's comment. Just saying...

50. GreenMan

Posts: 2684; Member since: Nov 09, 2015

Shut up...? Me...? Ha! I've that effect on people...! They start to hate me for no apparent reason...! On second thought; I guess TRUTH HURTS SOMETIMES... How about that, eh? G'Day!

28. magnanimus

Posts: 565; Member since: Mar 29, 2013

I'm with you on that. He always tries to sound smart but ends up sounding like someone trying too hard

51. GreenMan

Posts: 2684; Member since: Nov 09, 2015

Alcohol has its quirks... Age has its quirks... Loneliness has its quirks... Combine all these factors and you get... GreenMan...!!! It's in my CODE to be obnoxious... O'Day!

52. GreenMan

Posts: 2684; Member since: Nov 09, 2015

Alcohol has its quirks... Age has its quirks... Loneliness has its quirks... Combine all these factors and you get... GreenMan...!!! It's in my CODE to be obnoxious... O'Day!

53. Fona13A unregistered

Let's get hiiiiigh

42. scarface21173

Posts: 605; Member since: Aug 17, 2014

There lowest in 2 months. So in 2 months they rose 14 billion, WOW so they are no worse off than they were 2 months ago.

2. Hoggington

Posts: 356; Member since: Feb 23, 2016

I'd be really surprised if DJ Koh is still Samsung's mobile chief in 2017.

4. phichart

Posts: 335; Member since: May 03, 2014

I am happy about bad news of note 7 coz they want to release too early every year.. Next year they have to learn from their mistake and they have to try their best for what they did with note 7.... So happy that i didn't sell my s7 edge for note 7.. I will wait for s8 edge and sure they will learn from their mistake next year..

5. DeusExCellula

Posts: 1390; Member since: Oct 05, 2014

Yeaaa things do not look good. Hopefully the Note 7 will plummet in price and I can pick one up for cheap.

6. RoboticEngi

Posts: 1250; Member since: Dec 03, 2014

They take a hit and hopefully learn from it. It will take years to regain confidence from consumers.

14. Podrick

Posts: 1283; Member since: Aug 19, 2015

And hopefully better and safer battery finally comes to market.

47. trojan_horse

Posts: 5868; Member since: May 06, 2016

"It will take years to regain confident from consumers". For consumers in general, yes, probably. But for those consumers who have always trusted Samsung's product? I disgree. Heck, Ford and Toyota have had many recalls because of Breaks Paddle and Air Bag flaws in their cars... Has that stopped people from buying and trusting their products? No!

8. phonehome

Posts: 812; Member since: Dec 19, 2014

Too bad isn't listed on a U.S. exchange so I could purchase 'cleanly'.

17. tacarat

Posts: 850; Member since: Apr 22, 2013

Too true.

39. AlikMalix unregistered

I came to this article to say the same. It's a good buy right now, even if it drops more - just double up again. Unfortunately it's not on any exchange - Samsung would always a great investment - it's incredibly diversified. I'd be neutral to bullish after a drop like that. If I knew this battery thing would blow up (no pun), is take advance of volatility in the options market with an "iron condor" - those that know: know.

41. AlikMalix unregistered

EDIT: ....take advantage of volatility...

48. trojan_horse

Posts: 5868; Member since: May 06, 2016

I know it, ha! But no one could have known what would have happened to the Note7. Heck, who even knows which kind of saga will tarnish the iPhone7's sales after launch.

58. AlikMalix unregistered

Dude were talking market value for investment opportunity, and you come here trolling (I know you tried to hide it with your first paragraph - but couldn't resist with second. Those that don't see it, can't read between lines of his post). But if you must, AAPL is currently slightly undervalued... The positive response to an iPhone 7 launch overshadowed the negative sentiment that the iPhone 7 would be exactly the same as the 6. In my opinion iPhone 7 release will not beat those of 6 and 6s, but they'll be high - once again higher than any other mobile device sold (same for Apple Watch). Right now my position on Apple is neutral, once again will be using a strategy in the options market with maybe a put/call debit spreads. Others kinda agree with even more positive position than I am.http://www.barrons.com/articles/BL-TB-52779

9. kiko007

Posts: 7383; Member since: Feb 17, 2016

I wonder when replacements will be ready and available. The estimate given by Samsung was rather unrealistic honestly, especially for America after Consumer Reports essentially took over the recall. I think we're look at October at the earliest and November at the absolute latest. Either way, it's a tough break for Samsung financially.

36. TerryTerius unregistered

Yeah, it's a shame. But who knows, we shall see. They are far from the first company to supposedly suffer a crippling blow of this magnitude due to a mistake. Some recover and even thrive, others never do. Nobody knows at this point. Best of luck to them. It would be a shame if this shuts down their efforts in mobile.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.