The Note 7 nightmare cost Samsung $22 billion

The capitalization of Korean electronics giant - Samsung Electronics has evaporated 22 billion USD in the last 2 sessions due to news of banning and warnings on using Galaxy Note 7 smartphones.

The company's shares have fallen 11% since last Friday. Yesterday alone, they lost 7%, reducing Samsung's market capitalization to more than 200 trillion won ($186 billion).

This is the biggest two-day drop since 2008, after US officials warned users about the Galaxy Note 7 battery explosion problem. Many airline officials and airlines also called on passengers to stop using this phone while flying.

This suggests that the Samsung brand may be taking a hit beyond the estimated $1 billion cost of the recall. Samsung has spent heavily on marketing over the years, hoping to beat Apple by launching new products weeks in advance. But that advantage is slowly fading.

Note 7 is causing Samsung Electronics to struggle. Photo: Reuters

“Samsung’s nightmare is getting worse,” said Bryan Ma, vice president of product research at IDC. It’s likely that airlines will ban all Samsung phones, not just the Note 7, because it’s hard to differentiate between different phone models. “If that’s the case, the Note 7 could drag down the whole company,” Ma said.

Samsung had to announce a product recall on September 2, after dozens of smartphones of this line had batteries catching fire or exploding while charging. This happened when the company launched the product just under a month ago. Samsung said they had sold about 2.5 million units worldwide.

The U.S. Consumer Product Safety Commission (CPSC) and Samsung are working to issue a formal recall notice as soon as possible here. However, the agency's involvement also means that stricter consumer protection policies will be in place. For example, U.S. law may prohibit the sale or resale of any recalled products.

"Uncertainty surrounding the Note 7 recall is rising after the tough response from the US. Samsung must settle this as soon as possible to reassure customers. In the worst case, they may have to consider stopping Note 7 sales for a while," said Lee Seung Woo, an analyst at IBK Securities.

Samsung Electronics shares rose again this morning. By 11:30 a.m. (Hanoi time), the code had increased by 5.2%.

According to VNE