When Samsung announced it would recall its Galaxy Note 7 devices due to explosive battery mishaps, airlines and regulators acted swiftly. So did Samsung investors.
Shares of Samsung Electronics, which includes the Korean conglomerate’s smartphone division, plunged 6.9% between the Korea Exchange’s close on Friday and Monday, according to the financial data company Factset. The stock is currently priced at 1.465 million won ($1,311.26), bringing it to lows not seen since July, and down 13% from its most recent high, on Aug. 23. Since the company announced it would recall the Galaxy Note 7, the company has shed over 28 trillion won (more than $26 billion) off its market cap, according to Factset.
The dip puts an end to a rally for the Samsung Electronics that has lasted nearly the entire calendar year. Despite waning sales due to competition from Chinese brands such as Huawei and Xiaomi, the Korean smartphone maker won over investors this year on the strength of strong operating profit and robust sales of the Galaxy S7.
Over the weekend, more airlines and regulators urged customers to proceed with caution when taking Galaxy Note 7 devices aboard. The European Aviation Safety Agency reminded passengers to keep the devices turned off during flight, as did Delta Airlines, Singapore Airlines, and other carriers.
Samsung announced today that it has appointed its vice chairman, Jay Y. Lee, to its board of directors, signaling that Lee, the son of Samsung Electronics chairman Lee Kun-hee, would serve as the company’s de facto leader. It also confirmed it sold its printer division to HP for $1.05 billion. Neither of these developments seem to have done much to prevent the company’s stock price fall, however.
Will the dip continue? For Samsung, the recall couldn’t come at a worse time—not only is the holiday season just around the corner, but arch-rival Apple just released the iPhone 7. If the company can’t boost sales in the coming months, investor confidence might disappear even quicker than it surfaced.