The 3-days rout shaves about $23 billion off Samsung’s market value.
On Tuesday, a day after their decision to suspend the production of Galaxy note 7 due to a few cases of burning devices, Samsung announced about ending the production Note 7 at all. Those decision hurting Samsung a lot: The company slashed billions of dollars off its sales and profit estimates.
The company cut its operating part estimate by $2.3 billion to $4.6 billion, and its sales estimate by $1.8 billion to $41.9 billion. After their stock climbed up more than 50% from January low, this week crisis brought Samsung’s stock to drop 10% so far.
And the problems don’t stop here. most analysts believe that more pain is yet to come to the world’s biggest smartphones maker. Nomura Securities has predicted that the decision to ditch the Note 7 will cost Samsung $9.5 billion in sales and put a $5.1 billion dent in profit between this month and the end of the next year.
“It seems to be difficult for the company to overcome this issue immediately. Given the facts that I have, the company is unlikely to post solid earnings for the fourth quarter. I feel like the company has lost its momentum now” said Chaiwon Lee, chief investment office at Korea Value Asset Management to Bloomberg.
The lost of momentum that Mr. Lee talked about is not only the momentum of sales, but also a momentum of reputation. From one of the biggest tech maker in the world, and the worst rival of Apple in the battle for leading the smartphones market, there are a lot of concerns that the damage to Samsung reputation from the Note 7 fiasco will be unfixable and deter people from buying its other smartphones.
“Honestly and transparency are needed to repair the damage to its brand image. Failure to do so will create long-lasting repercussions on its other product lines” said TuanAnh Nguyen, a research analyst at Canalys, to CNN.
But there are few brave investors who’re still believe in Samsung collapsing stock. “The recent pullback in the share price offers an attractive entry point, a buying opportunity, for long term investors” explain Knut Gezlius, a fund manager at Norway’s Skagen, to Bloomberg “We believe the battery issue in Samsung most likely is a short-term issue with limited impact on the intrinsic value of the company”.
Kar Tzen Chow, a Malaysian fund manager, is agree with Mr. Gezilus prediction, and take it even more farther: ”Samsung will come out of this episode relatively unscathed. Any impact will be temporary. It will survive episodes and move on”, he said to Bloomberg too .
Samsung will try to relive itself only on early 2017, when the company will launch the next model in its S series. Experts believe that Samsung should prioritize reliability over flashy features, which the note 7 had in abundance.