Investors absorbed the news and held their nerve so there wasn't an immediate reaction but after the Federal Aviation Administration sent out a warning against the Galaxy Note 7 they started dumping shares which caused Samsung to lose some $10 billion in market value. That loss in market value has now doubled as investors price in what they believe to be the true impact of the Galaxy Note 7 debacle. Investors were seen dumping their positions after Samsung told Galaxy Note 7 owners to power down their phones and urged them to take part in the replacement program.
Samsung shareholders have seen the biggest two-day price drop since the 2008 financial crisis, over $20 billion have now been erased from Samsung's market cap and even though the recall is expected to cost Samsung around $1 billion the impact on its brand value is believed to be even higher. Analysts are now of the view that even though Samsung will be selling the Galaxy Note 7 with new batteries the handset will just won't sell as well as it would have had this entire debacle never happened. Some expect that Samsung might lose as much as $5 billion in revenue due to the Galaxy Note 7 recall.
Samsung hasn't released its earnings guidance for the third quarter as yet but are likely to see a glimpse of the true financial impact of the Galaxy Note 7 recall in its expected revenue and profit.
